UK markets closed
  • FTSE 100

    6,963.64
    -63.84 (-0.91%)
     
  • FTSE 250

    23,658.94
    +26.10 (+0.11%)
     
  • AIM

    1,275.74
    +3.60 (+0.28%)
     
  • GBP/EUR

    1.1711
    -0.0007 (-0.06%)
     
  • GBP/USD

    1.3737
    -0.0059 (-0.43%)
     
  • BTC-GBP

    35,389.64
    +499.26 (+1.43%)
     
  • CMC Crypto 200

    1,193.48
    -32.05 (-2.62%)
     
  • S&P 500

    4,432.99
    -40.76 (-0.91%)
     
  • DOW

    34,584.88
    -166.44 (-0.48%)
     
  • CRUDE OIL

    71.96
    -0.65 (-0.90%)
     
  • GOLD FUTURES

    1,753.90
    -2.80 (-0.16%)
     
  • NIKKEI 225

    30,500.05
    +176.71 (+0.58%)
     
  • HANG SENG

    24,920.76
    +252.91 (+1.03%)
     
  • DAX

    15,490.17
    -161.58 (-1.03%)
     
  • CAC 40

    6,570.19
    -52.40 (-0.79%)
     

Lenders attempt to defuse mortgage 'timebomb'

Lenders attempt to defuse mortgage 'timebomb'

Mortgage lenders have met a commitment to contact all of their borrowers with interest-only mortgage, industry body the Council of Mortgage Lenders (CML) says. However, just under a third of borrowers have responded so far.

Lenders have contacted borrowers whose mortgages are due to finish between now and the end of 2020. This follows an agreement made with regulator the Financial Conduct Authority (FCA).

[See the latest mortgage rates]



The clock is ticking

The CML says lenders have got in contact via mailings, telephone calls and even home visits to ask how they are going to repay their mortgage. It’s all part of an effort to defuse the so-called interest-only mortgage ‘timebomb’, where borrowers come to the end of their interest-only mortgage term without enough money to pay off the capital amount left.

Of the 30% of people who have responded, encouragingly four out of five say they have a plan to repay their mortgage in full.

And the CML says that since the current spate of warning messages began last year both the number of interest-only mortgages and the amount borrowed on them have begun to fall.

Some people have shifted their interest-only mortgage to a repayment mortgage, where you pay both capital and interest back each month.

The concern was sparked by the FCA, which claimed that up to 1.3 million mortgages were facing a shortfall and in around a third of these cases the shortfall was greater than £50,000.

If you have an interest-only mortgage and are worried about paying it off, the first thing to do is not to panic. Lenders will be sympathetic and want to help you. But the most important thing to do is to act now.

[What to do if you're struggling to pay off an interest-only mortgage]

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting