Skipton launches interest-only mortgages

Skipton has launched a new interest-only mortgage range and made cuts of up to 0.22 per cent to its core products. The interest-only purchase ran

Skipton has launched a new interest-only mortgage range and made cuts of up to 0.22 per cent to its core products.

The interest-only purchase range, which offers free valuations, features fee-free two-year fixed rates at 1.66 per cent to 60 per cent loan-to-value (LTV), 1.33 per cent to 60 per cent LTV with a £1,495 completion fee, and 1.79 per cent to 80 per cent LTV with a £1,495 completion fee.

Five-year fixed rates include a fee-free 2.25 per cent deal to 60 per cent LTV and a 2.29 per cent deal to 80 per cent LTV with a £1,495 completion fee.

Interest-only remortgage deals, which come with free valuations and standard legals, include fee-free two-year fixes at 1.79 per cent to 60 per cent LTV and 1.46 per cent to 70 per cent LTV with £1,495 completion fee. 

The five-year fixed rate range includes a fee-free 2.24 per cent deal to 60 per cent LTV and 2.21 per cent to 80 per cent LTV with £1,495 completion fee.

Residential core mortgages now feature a two-year fix at 1.2 per cent to 60 per cent LTV with a £995 fee, a fee-free two-year fix at 2.65 per cent to 90 per cent LTV, and a fee-free five-year fix at 3.05 per cent to 90 per cent LTV.

The lender has also launched a new range of two-year fixed rate residential remortgage products offering free valuations and £350 cash back, including a two-year fixed rate at 2.69 per cent to 90 per cent LTV with no fee.

Paul Darwin, Skipton’s director of intermediary relationships, said: “At Skipton, we recognise that there is a place for interest-only in the market as long as borrowers have a defined exit strategy to repay the loan.

“We are taking an appropriate and responsible approach to this type of lending.

“Our latest lending policy changes are a reflection of this and provide greater choice to borrowers looking at this route.”

Kevin Dunn, mortgage and protection adviser at Leicestershire-based Furnley House, said: “The rates sound competitive. Interest-only mortgages can be really useful if used correctly. As long as the borrowers are committed to making overpayments, it can be quite useful. 

“I would hope that more lenders loosen their criteria. After the abuse during the financial crisis there was a blanket refusal to offer them, but as long as the broker has done their job correctly, and as long as you have got a clear way of repaying and an exit strategy, it is not mis-selling.”

Last month FTAdviser reported more than a third of interest-only mortgages are predicted to be paid off by 2020 in a sign borrowers are finally getting to grips with their debts.

The total amount of interest-only mortgage debt that will be paid off comes to more than £50bn, or 450,000 loans, according to research by Leeds Building Society and the Centre for Economics and Business Research.

Almost 136,000 interest-only mortgages are due to mature this year alone, with a value of almost £16bn.

simon.allin@ft.com

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