However, following a review of interest-only mortgages in 2013, the FCA found that just under half of borrowers would not be able to pay off their loans in full. 

More vulnerable, poorer borrowers who will be less able to repay the lump sump of their mortgage are likely to be in the latter two cohorts, which is why the FCA is ramping up efforts to encourage banks and borrowers to seek new arrangements.

Jonathan Davidson of the FCA said the regulator was “very concerned” that a “significant number” of interest-only customers may not be able to repay the capital at the end of their mortgages.

Samuel Tombs of Pantheon Macroeconomics noted that the effective interest rate on mortgages rose to 2.55pc in December, up from 2.50pc in November, the first increase since May 2014, and the largest since January 2010.

UnsecuredCredit – BingNews