CML plays down worry of interest-only mortgages increase

The rising number of people who are taking out interest-only mortgages is not necessarily a bad sign, according to the Council of Mortgage Lenders (CML).

A number of factors influence these types of mortgage, such as the popularity of the buy-to-let mortgage market, says the CML.

Bernard Clarke, communications manager for CML, said: "If they''re taking it from an informed point of view then there isn''t a need for concern about that. If borrowers are taking opportunities later when they remortgage to address the problem then that''s fine."

The CML also said that the number of people taking out interest-only mortgages is not as high as it has been in the past.

Mr Clarke added that the in the eighties there was a "very high popularity" of endowment mortgages.

A report from mform.co.uk revealed that 21 per cent of loans which were advanced in 2006 were on an interest-only basis and borrowers did not specify a repayment method. This rose to 24 per cent in 2007.

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