Paragon’s FACT index showed the take-up of repayment mortgages increased quarter on quarter from the 71% recorded during the final quarter of 2010.
Demand for repayment loans has been rising steadily since the third quarter of 2007 when it hit a six year low of 57%. This is the highest proportion of capital repayment mortgages since Paragon launched the FACT index in 1996.
Interest-only mortgages continued their downward trend, according to Paragon. Around 14% of mortgages introduced during the quarter were interest-only, the lowest proportion since the first quarter of 2004 and down from a high of 28% recorded during the third quarter of 2007.
John Heron, managing director at Paragon Mortgages, said: “FACT shows that residential mortgage lenders have been clamping down on interest-only since the start of the credit crunch and the decline of this market shows no signs of slowing down.
“The Financial Services Authority signalled the demise of interest-only through changes proposed in the mortgage market review and it appears that lenders are positioning their businesses in anticipation of regulatory changes.”
