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By the End of Q2 2006, Interest Only Mortgages Accounted for 25.1 per cent of All New Mortgages.

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c46618) has announced the addition of Datamonitor's new report: Interest Only Mortgages: Future Ramifications for the UK market to their offering.

Interest-only mortgages are currently a great source of industry and media attention. Indeed, interest-only mortgages have become increasingly popular, yet they pose a number of risks to both customers and lenders. What can lenders and intermediaries do to reduce the possibility of problems emerging in the future?

Scope of this title:

* Provides data on the extent to which interest-only loans account for in the mortgage market and forecasts their proportion up to 2010.

* Discusses the benefits and risks of interest-only mortgages for both customers and lenders.

* Provides insight into how lenders can reduce their exposure to potential future problems.

* Incorporates primary interviews from industry experts and secondary data from a wide range of sources.

Highlights of this title:

Over the last few years, interest-only mortgages have continued to increase in popularity. Indeed, in Q1 2005 interest-only mortgages accounted for 14.9 per cent of all new mortgages taken out during the quarter; by the end of Q2 2006 they accounted for 25.1 per cent.

Complaints on interest-only mortgages are increasing, but they are still on a very small scale. The Financial Ombudsman Service (FOS) has stated that it receives around 300 complaints on interest-only mortgages a year.

Lenders and intermediaries can and should do more to tackle current problems with interest-only mortgages. These steps include contacting customers on a yearly basis, making sure the customer understands the risks and the need to set up a repayment vehicle, and examining their mortgage selling processes, among others.

Reasons to order your copy:

* Plan your strategy with confidence using forecasts of the proportion of interest-only mortgages as a repayment vehicle up to 2010.

* Evaluate the risk of interest-only mortgages and understand what steps your business can take to reduce its exposure.

* Identify current best practice in the industry, and what other steps lenders are likely to take.

Table of Contents:

CATALYST

SUMMARY

METHODOLOGY

ANALYSIS

Interest-only mortgages have become increasingly popular

Interest-only mortgages explained

Interest-only mortgages now account for a significant proportion of mortgages in the UK

Their popularity is not surprising given that interest-only mortgages provide a number of opportunities for borrowers

But there are a number of significant risks attached to interest-only mortgages

Interest-only mortgages pose a number of important risks for borrowers

Moreover, there are an increasing number of interest-only mortgages whereby the lender is not aware of how the borrower will repay the capital at the end of the mortgage term

As a result, lenders are not able to judge the scale of the potential problem

In fact, we forecast that the proportion of interest-only mortgages without a repayment vehicle in place will increase over the next years

It appears there could be trouble ahead for lenders and intermediaries

Complaints have started to trickle in at the FOS

Moreover, the FSA has now become involved

It is believed that the FSA will highlight deficiencies rather than actively change current practices

However, at the end of the day, should customers be unable to pay their mortgage, lenders will then repossess the property

Yet is a mis-selling crisis in store?

The majority of the mortgage industry does not foresee a mis-selling crisis

Moreover, lenders and advisers argue that the responsibility for any shortfall in mortgage payments is down to the customer, not them

Lenders and advisers must therefore take more steps to reduce potential future problems

Lenders are beginning to take a number of steps

But more should be done

In fact, all of the above measures fall under the FSAs TCF initiative

APPENDIX

Supplementary data

Definitions

Endowment mortgage

Interest-only mortgage

Further reading

European mortgage reports

UK mortgage reports

UK mortgage briefings

Forthcoming mortgage briefings

UK Mortgage Market Map 2006

Key Features

For further information

Relevant links

Custom research capabilities

Ask the analyst

List of Tables

List of Figures

For more information visit http://www.researchandmarkets.com/reports/c46618

Source: Datamonitor
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Date:Dec 7, 2006
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