Lea Karasavvas, managing director at Prolific Mortgage Finance was not surprised by the building society’s move to discontinue the range.
He said: “At present, it is still a sector of the market that has choice. Aldermore, Accord, Woolwich and Precise all have good offerings in this bracket as well as others, but the main concern is that Nationwide is a trend setter.
“It must now only be a matter of time before other lenders follow suit and, rather like self cert mortgages, interest only becomes a thing of the past.”
Karasavvas called Nationwide’s reaction “conservative” and defended interest only as a viable option for the right client.
But he added: “what is clear, is that many people have previously relied on the capital growth of their property as a repayment vehicle in itself and the conservative levels of growth we have seen over the last few years show that this is a very high risk repayment vehicle.
“I expect this decision will have a ripple effect in the market and interest only may now simply become a great USP of private banks dealing solely with High Net Worth clients.”
Currently, Halifax, Natwest, Santander and HSBC have all stated they do not have plans to withdraw their interest only ranges.
