- Families owe more than £200billion to lenders on interest-only mortgages
- Nearly a quarter of all mortgages from major banks are interest-only
- It means millions of customers face a huge bill when their loan term ends
Families owe more than £200billion to the big High Street lenders on interest-only mortgages – sparking fears of a new debt timebomb.
Nearly a quarter of all mortgages from major banks and building societies are interest-only, analysis by the Mail reveals.
It means millions of customers face a huge bill when their loan term ends and they have to repay the initial amount they borrowed in a lump sum.
Families owe more than £200billion to the big High Street lenders on interest-only mortgages – sparking fears of a new debt timebomb
There are fears many will be forced to sell their homes. Experts also fear a slide in house prices if homes bought with interest-only money flood the market.
Interest-only mortgages were hugely popular in the 1990s and in the run up to the financial crisis. In 2006 they accounted for one in four home loans.
Jonathan Harris, of mortgage broker Anderson Harris, said: ‘This is a timebomb. I’m sure the problems are going to come home to roost as borrowers get to the end of their mortgage terms and are suddenly asked for the money back.
‘A lot of those people are going to be approaching retirement age – they won’t have any options and they won’t be able to refinance anywhere.
‘The banks may be forced to foreclose on these individuals and they could be perfectly decent people who have never missed a payment.’
There are fears many will be forced to sell their homes. Experts also fear a slide in house prices if homes bought with interest-only money flood the market
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