Data shows June rise in searches for interest-only mortgages

July 24, 2023 by Brendan O'Neill

Surveys and Statistics

The latest figures to be issued by Legal & General show that last month saw a significant increase in the number of searches that advisors conducted for interest-only mortgage loans.

Search numbers for this type of loan on the Ignite product search platform owned by Legal & General went up by over 50% in comparison to the month before. There was a 53% rise over the course of June, which made interest-only loans the single most widely searched for product type by advisors during the month.

According to Mortgage Strategy, Legal & General said in its statement accompanying the figures that:

“This highlights that borrowers could be looking to reduce their monthly costs for a period of time before switching back to a capital repayment mortgage if rates become more favourable.”

The lender backed up that statement with evidence that other schemes designed to improve mortgage affordability – such as the government Help to Buy one – had also seen a lot of searches by advisors during last month. Searches related to Help to Buy rose by 40% in June, despite the fact that the end date for it was the 31st May.

First-time homebuyer searches remained high on the platform, but Legal & General pointed out that this segment of the market remained most likely to be affected by issues related to affordability.

Many advisors who have CeMAP training will be suggesting options like switching temporarily to interest-only deals as a way of cutting back costs for borrowers in the current economic climate.