FCA analysis reveals there are fewer than 1 million interest-only mortgages outstanding

The number of interest-only (750,000) and part-interest-only (245,000) mortgages has halved since 2015, new FCA analysis has found. The fall is a result of borrowers moving in greater numbers onto repayment loans or repaying earlier than expected. 

Of those remaining, the greatest number of interest-only mortgages are set to mature in 2031 (72,000) and 2032 (77,000), with a smaller peak in 2027. This means borrowers without a repayment plan still have time to act and reduce at least some of their outstanding capital by the end of their mortgage. 

Consumer research, commissioned by the FCA, found the vast majority of borrowers (78%) were aware of the need to have a repayment plan in place when they took out the mortgage.  

The research also showed that 82% of borrowers were confident in their ability to repay the outstanding capital at the end of the mortgage term. However, the research suggests this may be overly optimistic – while 36% of borrowers expected some shortfall, modelling suggests this could be closer to 46%. 

Borrowers without a repayment plan are encouraged to speak to their lender to discuss their options. Simply speaking to your lender will not affect your credit rating, and steps can be taken now to provide a greater range of options at the end of the mortgage term. 

David Geale, Director of Retail Banking at the FCA, said: 

‘Whilst it is encouraging to see the number of interest-only mortgages reducing faster than expected, with the majority of loans being paid off or transferred to other products, the challenge remains for a significant number of borrowers.  

‘Taking an interest-only mortgage can mean lower monthly payments, but borrowers need a plan to repay the outstanding balance when the mortgage comes to an end. If you have an interest-only mortgage and are unsure if your current plan is sufficient, speak to your lender as soon as possible, to discuss your options.’

The FCA will now be engaging with industry and consumer groups to discuss the research findings and how lenders can further support borrowers who may not be able to repay all the capital owed at the end of their mortgage term.    

Over the past decade, the FCA has put in place new rules and guidance for firms to make sure interest-only borrowers were being treated fairly, especially those at risk of not being able to repay. It carried out a review in 2018 to check the fair treatment of these borrowers.   

With the Consumer Duty now in effect, the FCA will review its existing guidance on the fair treatment of interest-only borrowers to ensure it is in line with the higher standards set by the Duty. Firms should now be considering how they support their borrowers and meet expectations set out by the Duty.  

Notes to editors 

  1. This research consists of 2 publications
    • An FCA analysis of the Product Sales Data: Mortgage Performance Data. This analysed FCA data on the population of interest-only mortgages that existed on 31 December 2022.  
    • Research carried out by Opinium, commissioned by the FCA, looking at the ability of interest-only borrowers to repay the capital at the end of their mortgage term. This report was based on results from quantitative and qualitative research as well as using data modelling techniques to predict potential levels of shortfall across the market (balance sheet modelling).  
  2. This balance sheet modelling combined financial information about the mortgage as well as the repayment vehicles used by interest-only mortgage holders with assumed economic factors.  
  3. The Opinium Research, commissioned by the FCA, can be found here. The FCA analysis of mortgage product sales data can be found here
  4. Separately, the FCA has moved quickly to make changes to our rules to support key commitments agreed by lenders under the Mortgage Charter.  
  5. The FCA is also currently consulting on proposals to incorporate relevant aspects of existing Tailored Support Guidance to provide a stronger framework for firms to better support customers facing payment difficulties. 
  6. The FCA published updated Product Sales Data on 28 June 2023, which includes mortgages sales data for 2022. 
  7. Find out more information about the FCA