The FSA have put them at the top of their table of "emerging retail risks" and now several mortgage experts have begun echoing their anxieties. Interest- only mortgages may well prove to be the next mis-selling scandal to taint the mortgage industry. Last year, 200,000 homebuyers took out the specialist mortgage without putting a repayment vehicle for the lump sum in place, of whom 60,900 were first-time buyers, says the Council of Mortgage Lenders. And that figure is up, accounting for 25% of first-time buyer mortgages in 2005, compared with 15% in 2004. The dangers of such a strategy are obvious. "If borrowers have not set up a way of repaying the mortgage, they could lose their property," says The Independent's Stephen Pritchard.
The attractions are understandable. Figures compiled by Britannia Building society show that a £150,000 mortgage costs the borrower £863 a month over the first two years, against £605 on its interest-only equivalent. But there are worries that some lenders are not properly informing people of the risks involved in taking interest-only.
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Should the income protection age cap be lifted?You can only get income protection cover if you are below age 59. With people now working for longer, should the limit be raised?
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UK interest rate cut all but ruled outRates are expected to remain at 4.25% when the Bank of England announces its decision tomorrow
