New customers will no longer be able to take out interest-only mortgages from the Co-operative Bank .
The lender has revealed these individuals can only secure home loans on a capital and repayment basis going forward.
A number of factors have led the organisation to implement this change, including uncertainty regarding interest rates and tumbling house prices resulting in falling demand for deals of this type.
The Co-operative Bank pointed out the alterations will not affect customers currently on a interest-only mortgage, but explained fewer than ten per cent of new borrowers are making use of these arrangements – markedly less than the 25 per cent recorded in 2007.
James Hillon, head of mortgages at the organisation, noted the home loan market has changed significantly over the last four years, adding it is the group’s responsibility to follow these developments closely and act accordingly.
Mr Hillon stated: “With house prices continuing to stagnate, we’re seeing that buyers are increasingly taking a long-term view to home ownership rather than seeing it as a route to watch their money grow.”
