First time buyers 'less likely' to go interest-only

01-Dec-2006

First time buyers are less likely to opt for an interest-only mortgage as a way to get onto the property ladder, research suggests.

According to a study, published by the Council of Mortgage Lenders (CML), 17 per cent of first time buyers opt for an interest-only mortgage, compared with a national average of 25 per cent.

"The view that interest-only mortgages are being used as a dangerous shortcut around affordability barriers is not borne out by our research", said Michael Coogan, director general of the CML.

"But we do need to understand as much as we can about why borrowers choose them and what they do after they have taken out their loan," he added.

CML data suggests that interest-only mortgages are an attractive option for home buyers with "uneven streams of income", such as the self-employed or those who receive large bonuses.

The CML is a UK-based trade association for mortgage lenders.

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For our first time buyers guide to buying a property click here.

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