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CML: Restricting interest-only - in whose interest?

CML: Restricting interest-only - in whose interest?

Wednesday, 8 September 2010 12:00 AM

The FSA has said it wants a debate on interest-only mortgages. These loans continue to be a logical choice for a range of customers, for whom they deliver clear benefits.

But, in a risk-averse market and uncertain regulatory environment, some lenders have already reacted to the FSA's proposals by restricting availability of interest-only mortgages.

Firms are unlikely to want to be responsible for checking a borrower's repayment plans and continuing to monitor that they are on track - or to accept the blame if they don't deliver the intended outcome. The FSA says it wants to create "a flexible market that works better for consumers." However, its likely approach to interest-only mortgages will have the opposite effect - adding costs and restricting choice for consumers, without delivering wider benefits.

Today, we also publish our list of the largest mortgage lenders in 2009. It reflects a market which has re-structured substantially and contracted significantly, with gross lending having declined by more than 50% since 2007.

Visit our website to read the latest issue of CML News & Views.

Bernard Clarke

Council of Mortgage Lenders
tel: 020 7438 8923
website: www.cml.org.uk
twitter: Twitter

**Now open for booking** - CML's Mortgage Industry Conference and Exhibition - "What's up your sleeve?" - 18 November 2010, London.

To find out further information or to secure your place today, please visit our dedicated website www.themice.org.uk.

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