Many interest-only borrowers replying on house price inflation

The majority of people (57.6%) with interest-only mortgages think house prices will increase enough, for their debt not to be a problem at the end of the mortgage, according to research carried out for financial outsourcer HML. HML chief executive Andrew Jones said: "There is an unrealistic expectation amongst a significant number of interest-only borrowers that annual house price inflation will return to double digits and dig them out of a sticky situation." HML surveyed 1,114 borrowers and their results show that only three out of ten of homeowners with an interest-only mortgage are confident they have a plan that will repay the whole debt. Aaron Strutt, a broker at Trinity Financial, says: "We regularly receive enquiries from borrowers asking how much more their mortgage repayments would be if they switch to capital repayment. They want to make sure that their mortgage will be repaid by the end of the term. "We also take many enquires from borrowers looking to secure an interest-only mortgage. There are still a number of options available and some lenders have much better terms than others." November 2, 2012