Experts believe that the April budget announcement will boost mortgage payments as people can now access their pension pots all in one go.
Interest-only borrowers in particular may be able to use this new freedom to their advantage and pay off the capital in full when they reach 55 years of age and can access their pension funds.
Lenders have been moving away from interest-only mortgages, and people coming to the end of their term may find it difficult to get an extension, and may be moved onto high and variable rate mortgages which will greatly inflate their monthly rates.
Hopefully the promise of being able to access the pension funds will make lenders be more lenient and extend the term conclusion for a few years for those reaching the end of their terms before they reach 55.
This is all only a hope as of yet. Halifax, Nationwide, HSBC and the Council of Mortgage Lenders have all said it is still too early to make any promises to alter their lending criteria due to these factors.
However, the Financial Conduct Authority warned lenders to tighten their lending criteria, especially in regards to interest only mortgages as millions were approved for interest only pre-financial crash, without necessarily proving how they would pay the debt off after their term.
Whether lenders and the FCA will allow the interest only mortgage holders to use their pension pots as a way to pay off their mortgages is yet to be seen, but for some people it could be a financial life saver.
