MSE News: Nationwide axes interest-only mortgages

Former_MSE_Helen

"The building society will stop selling new interest-only mortgages next week ..."

Read the full story:

Nationwide axes interest-only mortgages

brit1234

Good news, lets hope this moves to buy to let products as well.

Interest only was used to lend people more than they should take during the property bubble prior to the credit crunch. It has no place in responsible lending.

Simon_gloster

Just the start of a mass onslaught by lenders ditching IO.

I dont think it should go completely, used properly and monitored yearly using the acceptable payment plans it can possibly provide funds over and above the mortgage debt meaning the borrowers could potentially buy a new car or go on holiday/round the world cruise. Doh!!!

Pincher

For people who plan their cashflow, it's just another way of arranging their money. Maybe I can actually achieve better return on my money than having it tied up in the house. For Buy To Let, you don't want to reduce the amount owing, so you can maximise the tax deductible.

Remember that corporate bonds are effectitvely interest only loans, with a lump sum, aka balloon payment at the end of term. Why don't we insist on the government pay intererest PLUS principal when we buy gilts?

It's just a one sided paranoia. How can they possibly think they will lose money when the LTV is 50%!?

shortchanged_2

Yes good news. A form of lending that was seriously abused during the previous decade and only contributed to unrealistic rises in house prices.

Mobeer

Great news

leitmotif

Whether or not it has its uses for sensible borrowers, this marks a further step in the move towards more sensible lending, which is long overdue.

Equaliser123

Not sure this is good news at all as some people are saying. Seems to me that IO products - sold responsibly - have a complete place in the mortgage market.

When I started my career, I knew that I would have a near 100% pay rise within 2 years. Interest only suited my needs perfectly.

As a landlord, it suits my needs now to minimise tax.

brit1234

Equaliser123 wrote: »

As a landlord, it suits my needs now to minimise tax.

Tax money which could pay down our deficit and protect public services from cuts.


Buy to let tax advantages with interest only create an unfair advantage over first time buyers when buying properties. Get rid of them and create a fair playing field for all.

jimjames

brit1234 wrote: »

Tax money which could pay down our deficit and protect public services from cuts.


Buy to let tax advantages with interest only create an unfair advantage over first time buyers when buying properties. Get rid of them and create a fair playing field for all.

And what about the people who can't buy/don't want to buy that are able to rent thanks to landlords providing property?

It is right for IO mortgages to be used in limited circumstances but being anti them purely to justify a view on the property market doesn't seem sensible.

Thrugelmir

Pincher wrote: »

It's just a one sided paranoia. How can they possibly think they will lose money when the LTV is 50%!?

Banks make a profit margin on lending money. Not speculating with depositers money.

Capital solvency requirements (Basle 3) are no doubt underpinning the move.