The FSA said today that the rules on interest only loans would be tightened. Considering how many lenders are stopping them I assume this means the end of interest only loans. I might have got this wrong but presumably this is going to make it even harder for first time buyers and increase inequality between those with wealhy relatives and those without. Thoughts?
The real problem for first time buyers is that houses are too expensive. Lenders realise this, which is why 100% mortgages and interest only mortgages are set to become a thing of the past or at best a very expensive option.
The real inequality is not between those with wealthy parents and those without but between savers (including those who have saved for pensions) and borrowers.
What sort of “alliance” is a limited company?
People do not own their home if they have an interest only mortgage. They are renting it from the bank. interest only mortgages are a scam which will just produce millions of foreclosures
Interest-only mortgages will still be on offer. It is just that you need to prove that you have the means to pay it off at the end of your term – 20-30 years or whatever. In the past, everyone just assumed that the original loan would be paid off by the uplift in the house price, which isn’t right anymore. So I think you are right – no interest-only mortgages will make it harder for first time buyers, leaving a gap for buy-to-letters to get a stronger foothold. Is that good for Britain?
Hi all,
Our mortgage expert has answered one of our members’ questions concerning the impact of FSA rule changes on people with interest-only mortgages. Check it out here http://hoa.org.uk/services/ask-an-expert/interest-only-mortgage-expiring-in-january-2014/