A number of mortgage lenders have slashed the maximum loan-to-value (LTV) ratio on their interest-only mortgages, leading to fears that interest-only deals will eventually disappear, and leaving thousands of “mortgage prisoners” unable to switch to new deals.
The change of rules means borrowers will have to pay a deposit of £80,773 if they are to afford an average home in England and Wales on an interest-only basis.
In terms of those selling their houses, they are now left wondering – “Who will buy my house?”
Nationwide building society has lowered the LTV for interest-only borrowers from 85% to 50% since April 2011. The company said they changed their policy in response to similar changes from other lenders.