More banks change their interest only rules
A number of banks have made changes to their interest only policies over the last few months and these new rules are now taking effect.
Figures from the Council of Mortgage Lender show that there were 46,000 loans advances for house purchases in October, down 4% on September and 16% lower than a year ago. However, there was some good news, the deposit needed by the average first time buyer shrunk to 20%, from 24% in September.
In October this year, 93% of first-time buyers took out a capital repayment mortgages, the highest proportions since records began in 1974. Last week, the Royal Bank of Scotland and NatWest changed their first-time buyer lending policy; anyone buying their first property must take out a full capital repayment mortgage. The Skipton and Coventry Building Societies have also implemented this policy.
Platform Home Loans and The Co-operative Bank changed their policy this week and now borrowers wanting interest only must have a deposit of 25%. A spokesman for Platform said that they were trying to bring themselves more in line with the Financial Services Authority's review and that these changes could help to prevent greater regulatory intervention.
December 10, 2010
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