First-time buyers 'not seeking' interest-only mortgages

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First-time buyers 'not seeking' interest-only mortgages

Fri 1st Dec 2006

Interest-only mortgages are less likely to attract first-time buyers, compared to the national average, new research from the Council of Mortgage Lenders (CML) has shown.

The national average of those seeking interest-only products is 25 per cent but only 17 per cent of first-time buyers are opting for this type of mortgage.

Findings from the research also discovered that interest-only mortgages tended to appeal to those who had an irregular income

Michael Coogan, director general of the CML, remarked: "The view that interest-only mortgages are being used as a dangerous shortcut around affordability barriers is not borne out by our research."

"But we do need to understand as much as we can about why borrowers choose them and what they do after they have taken out their loan," he continued.

According to the Nationwide Building Society, the average UK property price is £172,185 which reflects a rise of 1.4 per cent during November on the previous month.

This means that the annual rate of growth of house prices stands at 9.6 per cent – the highest increase on a year-on-year basis since February 2005.

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