£16bn of interest-only mortgages due to mature this year

"In today’s market, every borrower’s repayment strategy is carefully assessed to ensure it’s adequate to repay the capital they owe"

This figure represents just over 450,000 interest only mortgages in the UK and is more than one-third of the total outstanding UK interest-only mortgage stock, currently standing at 1.6m mortgages.

Richard Fearon, Chief Commercial Officer of Leeds Building Society, said: “We firmly believe there’s a place for interest only alongside repayment mortgages. In today’s market, every borrower’s repayment strategy is carefully assessed to ensure it’s adequate to repay the capital they owe. It is pleasing to see from our research that many borrowers are addressing their individual repayment strategies and that the interest-only back book is shrinking ahead of schedule. This is testament to the hard work of the lenders, regulators and the CML for raising awareness among borrowers of the need for them to consider how they will repay their loan at the end of the term.

There are circumstances during some homeowners’ lives where an interest only-mortgage product suits their needs and situation well, but these do change and there are alternative options available to borrowers should they wish to reassess their method of repayment. If a borrower currently on an interest-only mortgage feels it’s not best serving their needs, or believes they may not be able to repay the capital when their term ends, they should speak to their lender or mortgage broker to assess whether their chosen repayment strategy is still adequate.”