Interest-only mortgage holders face "strategy" problems

24/11/2008

Many homeowners currently on "interest-only" mortgages will struggle to pay off their loans as the economy slows and the credit crunch continues, a study has suggested.

Insurers LV has released a new poll, showing that four in ten people on these loans are looking to pay off their mortgage debts through selling their homes.

However, house prices have declined by around 15 per cent in the past year, lenders say, and analysts expect them to fall further over months to come.

Mike Rogers, LV group chief executive, commented: "This strategy may have been over-turned by current and predicted future falls in property prices."

The LV poll also found that almost half of interest-only loan holders have no fixed strategy in place to pay off their debts.

Last week, the Council of Mortgage Lenders released new repossessions analysis.

The group said that they predicted a 70 per cent rise in people losing their home in 2008.

Tags; Young Family Finances, Credit Card Lifestyle,

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