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Co-op among the few bank to reverse from interest-only mortgage market

Just a few days back. the Co-operative Bank became the first bank to reverse itself out of the interest-only mortgage market in a complete manner. From 8th of May, the customers are being offered mortgages only on the basis of repayment as well as capital. This was the announcement that was made by the bank.
As far as the interest-only mortgage is concerned, it helps the borrower in clearing away the borrowed finances when the term of the mortgage comes to an end. This helps the borrower to use the capacity of the borrowed money to its fullest at the time when the prices of the property are already outgrowing the increase in the rates of the wages.
The Financial Services Authority that is FSA just a few days back had given a warning that the estimation of such kinds of loans are worth 1.5 million which is around 120 billion dollars. This sum is the repayable amount in the next 10 years. According to the plan of FSA, in the coming years, interest-only mortgage are going to be provided only on the basis of the repayment capacity of the borrower so that it will lead to responsible lending. Now the borrower will not have to keep waiting that the price of the house is going to get high. In the year 2007, when the boom in the prices of the property had come, it had also given a rise to the growing number of interest-only mortgages which was at its peak. If you want more information visit at here text a loan The officials of the Co-op bank were of the view that as because of the condition of the economy, the prices of the houses from past quite some time has been low as well as uncertain and due to this thing only there has been quick downfall of the interest-only loans. They also added that in the present time, less than 10 per cent of newer people are taking up mortgages on the basis of interest-only. This happened from the last three months of the year 2007.
Dominic Hennessy of Just Us Mortgages who works as a broker had to say that the demand of the interest-only mortgage loans has come down, the main reason behind this is that people are reading all kinds of news and are thinking that they can no more take them up. He further added that the people whose incomes are not fixed and go up-down that is who get all kinds of bonuses or who have amassed a lot of wealth, for such kinds of borrowers the interest-only loans are the best and the flexible way to borrow money.