‘Wake up call’ on interest-only mortgages
The Telegraph -
Many householders with interest-only mortgages face losing their homes amid
warnings from the City regulator that up to half will not have enough money to
pay their loans back.
The Financial Conduct Authority (FCA) has told banks to contact borrowers in an effort to prevent them defaulting on their loans.
Around 600,000 homeowners will have to repay their interest-only mortgage before 2020 and just under half will not have enough money to pay the loan back in full, according to FCA research.
The FCA said 100,000 of these borrowers have a shortfall of more than £50,000.
Most had a mortgage backed by an endowment policy, where regular savings are invested, but dismal returns on these investments mean they now face a deficit.
Over the next 30 years, around 2.6 million interest-only mortgages will be due for repayment and one in 10 people on these deals have no repayment plan at all.
Read More: telegraph.co.uk
