New data shows that the number of searches carried out by mortgage advisors for loans that are interest-only rose sharply again during September.
This data, which comes via the Legal & General Ignite sourcing platform, suggests borrowers are seeking to lower their costs, and reveals a rise of 51% in the searches for such mortgages across last month. This comes in the wake of many lenders opting to reduce their mortgage rates after the base rate held steady at 5.25% for September. Lenders seem persuaded that the base rate rises are now coming to an end, but borrowers appear less sure of that.
This rate was increased on 14 successive occasions between December 2021 and September 2023; this leaves many mortgage rates well above where they previously stood, even with the recent reductions. For example, in 2021 the average rate for a five or two-year fixed mortgage was under 2%. It currently stands nearer to 6%.
This makes the increased searches for interest-only loans understandable, and also explains the rise in searches for another type of product using the Ignite platform. There was a rise of 32% last month in the number of searches conducted by advisors for shared ownership mortgages. Again, these products are designed to provide buyers with lower monthly payments in comparison to standard mortgage loans – even fixed-rate ones.
Mortgage advisors will be able to exploit their CeMAP training and market knowledge to find specialist loans for those clients unable to meet the strict criteria for interest-only mortgages.