The Times reported this weekend that lenders including Lloyds Group and Nationwide have tightened up on interest-only criteria in anticipation of changes to FSA regulation; restricting loan-to-value to 75% and requiring proof of suitable repayment vehicles. Experts say there is still a place for interest-only mortgages, particularly for those whose income is set to increase over time or those that earn regular bonuses and plan to use them to reduce their debt, however, homeowners with existing interest-only mortgages whose properties have dropped in value could find it harder to remortgage. ‘Switch to fix’ deals have become an important part of the market at a time of uncertainty over what will happen to interest rates, but as experts in the Financial Times pointed out, borrowers opting for these deals could lose out on more competitive rates. The flexible nature of these deals is attractive but it will mean a compromise on the tracker rates, as well as the likelihood that fixed rates will have increased by the time the switch takes place. Elsewhere the Mail on Sunday looked at key trends currently driving property prices in the UK, including the mortgage drought and the increasing popularity of property websites.
What the papers say- 14th and 15th May 2011