The number of interest-only mortgages provided by lenders continues to fall, with the latest data from UK Finance revealing that there are currently 1.7 million outstanding interest-only mortgages, including partial interest-only, down 46% since 2012.
The total value of the interest-only mortgage book is £250bn, down 37% on the corresponding period.
It would appear that borrowers, including many buy-to-let landlords, are paying off their loans by downsizing to smaller properties, or using their savings or other funding sources to settle the debt.
Others are remortgaging, but on to repayment vehicles, because lenders are far more reluctant to handle interest-only loans, reflected by the fact that there was a 14.9% drop in the number of pure interest-only homeowner mortgages outstanding at the end of 2017.
Jackie Bennett, director of mortgages at UK Finance, said: “The number of outstanding interest-only loans has halved in the past six years, with a particularly steep decline in higher loan-to-value mortgages.
“Many borrowers continue to redeem ahead of schedule or switch to a repayment mortgage.
“However, there remains plenty more work to do over the coming years to ensure that those remaining borrowers who have so far been reluctant to engage have viable repayment plans in place.”