Will interest only mortgages become a thing of the past?
Slowly but surely a number of changes to the UK mortgage arena are becoming clearer with the expectation that interest only mortgages could well become a thing of the past. The Financial Services Authority (FSA) is adamant that any risk in the UK mortgage arena needs to be reduced in the short, medium and longer term to ensure we do not see a repeat of the credit crunch. However, many believe that the FSA has effectively thrown the baby out with the bathwater and overdone new regulations.
While there is no doubt that the mortgage industry had "run away with itself" in the run-up to the credit crunch, with many people overstretching their finances, perhaps the FSA has gone too far the other way?
The UK property sector is a vital part of the UK economy and without a steady property market the overall economy will be very volatile and very unpredictable. The Bank of England is stuck between two stools with the need to increase liquidity in the UK credit markets while also reduce credit risk in the financial sector. The key to an economic upturn in the UK may well lay in the ability of the Bank of England to inject further confidence in the UK economy while at the same time reducing the risk/reward ratios.
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