Interest-only mortgage stock down 73% since 2012: UK Finance

There were 664,000 pure interest-only homeowner mortgages outstanding at the end of 2023, 5.4% fewer than in 2022, according to the latest interest-only mortgage data for 2023 from UK Finance.

In addition there were 200,000 partial interest-only (part-and-part) homeowner mortgages outstanding at the end of 2023, 9.9% fewer than in 2022.

The total interest-only mortgage stock (including part-and-part) has now reduced by 73% in number and 56% in value since 2012, when the data was first collected.

Although the overall interest-only stock continues to fall, the number of interest-only loans at higher (over 75%) loan-to-values rose by 2.9% in 2023. However, loans at these higher LTVs now make up just 5% of the total, compared with 36% in 2012.

Additionally, the number of interest-only loans set to mature by 2027 shrank by 74,000 in 2023 to 187,000 loans, a fall of 28.4%.

Charles Roe, director of mortgages at UK Finance, said: “Although the mortgage market saw difficult conditions in 2023, most interest-only borrowers continued to repay on or ahead of schedule. The regular communications from lenders will have helped ensure interest-only borrowers remained on track to repay.

“The number of interest-only mortgages has dropped each year since the end of the financial crisis and fell again last year to around a quarter of the number seen in 2012.

"The number of borrowers who didn’t repay when their mortgage ended remained very low and most of these borrowers did repay within a few months of the term ending."