Co-operative Bank withdraws from interest-only lending

by Aaron Strutt

May 04 2012

The Co-operative Bank has announced that they will stop offering interest-only mortgages due to a lack of demand.  All new mortgages will now be available only on a full capital-repayment basis.

Banks and building societies continue to reduce the amount of interest-only rates they offer.  The on-going tightening of mortgage qualification criteria has almost certainly helped to limit demand from borrowers.

Platform Home Loans, the broker lending arm of The Co-operative Bank, sent a communication to Trinity Financial explaining: “We are receiving low volumes of mainstream and almost prime interest only applications, with the majority of our lending focused on buy-to-let.  Looking forward we also believe that demand for interest-only loans will continue to fall.

“With this in mind, the cost of changes that we would want to make in order to comply with future regulations and meet our own high standards as a responsible lender cannot be justified.  Therefore we have taken the decision to withdraw interest-only lending for new residential lending and additional borrowing on residential interest-only loans.”

Buy-to-let mortgages and existing interest-only customers will not be affected by the new criteria.

May 4, 2012