Legal & General Mortgage Club has said that Nationwide’s decision to pull out of the interest only market is not a shock.
The UK’s largest building society pulled the products last week, claiming that higher interest in other mortgages was the reason.
LGMC managing director Ben Thompson said that the move will come as a “surprise but probably not as a shock”.
He explained: “The number of mortgages taken out on an interest only basis over the last year or so has been dropping significantly and therefore a decision like this now whilst frustrating for some, won’t impact as badly as it would have done if pulled over a year ago.
“What’s most interesting is what happens next. Some will no doubt follow this move as they won’t want to be selected against for interest only however others will see this as an opportunity.
“It is clear that for the lenders that are prepared to take the necessary steps and checks required to assess the genuine plausibility of interest only repayment plans, this represents an opportunity.
“There has for some time been a view that interest only would end up as some sort of niche, with a lengthier process and more regular checks in place, and a slightly loaded pay rate. It looks as though we might well have just seen the catalyst for this change.”
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