Searches for interest-only mortgages rose by 51% in the past month, signalling that more buyers are exploring using the product to ease affordability issues.
That’s according to research from Legal & General Ignite, which registered the interest on its mortgage research and sourcing platform.
Despite the apparent clamour for interest-only, lenders are only likely to consider applicants who have a solid repayment plan in place to pay off the capital at the end of the term.
Similarly, applicants are also exploring shared ownership to deal with affordability issues, as the number of borrowers exploring these options rise by a third (32%) over the past moth.
Kevin Roberts, managing director, Legal & General Mortgage Services, said: “As interest rates settle into a steadier groove, it is encouraging to see a steady stream of borrowers making inroads into the property market, with the number of searches made on behalf of borrowers growing month-on-month since June.
“We have seen particularly high interest in shared ownership and interest-only products, a reflection of both the recent decision to maintain the base rate and longstanding affordability concerns in the market. While the Bank of Family has long been a major player in the property market, our data is also a robust reminder that family support isn’t always the only pathway to homeownership.
“Notwithstanding these positive pockets of demand, the market remains a complex puzzle to navigate for advisers, borrowers, and lenders alike. It is important that advisers continue to work on their business, as well as within it, particularly as we continue to battle economic uncertainty.
“For borrowers, it is crucial to remember the two key benefits of seeking guidance from a qualified mortgage adviser; access to products not available on consumer comparison websites, and the expertise gained from years of practice.”
The buy-to-let sector remains stable, with ‘first-time landlord’ recorded as the joint fourth most popular search term in September.
Searches for buy-to-let remained steady, with a marginal increase of 1% from August, while those for ‘regulated buy-to-let’ leapt by a significant 15%.
More existing borrowers are looking to increase their borrowing, as searches for second residential mortgages grew by 8% in September, while those for ‘capital-raising mortgages’ increased by 3%.