The number of pure interest-only homeowner mortgages outstanding at the end of 2023 fell by 5.4% year-on-year to 664,000, new figures published by UK Finance have revealed.

There were also 200,000 partial interest-only homeowner mortgages outstanding at the end of last year, a figure down 9.9% on 2022.

UK Finance’s data covered interest-only mortgages as well as maturity and loan-to-value (LTV) profiles.

The banking trade body’s figures revealed that the total interest-only mortgage stock, including part and part, has reduced by 73% in volume and 56% in value since 2012 – when UK Finance first collected this data.

Director of mortgages at UK Finance, Charles Roe, said: “Although the mortgage market saw difficult conditions in 2023, most interest-only borrowers continued to repay on or ahead of schedule. The regular communications from lenders will have helped ensure interest-only borrowers remained on track to repay.”

While the overall interest-only stock continues to fall, the number of interest-only loans at higher LTVs – over 75% – rose by 2.9% in 2023. However, loans at these higher LTVs now make up just 5% of the total, compared with 36% in 2012.

Furthermore, the number of interest-only loans set to mature by 2027 shrank by 74,000 in 2023 to 187,000 loans, a fall of 28.4%.

“The number of interest-only mortgages has dropped each year since the end of the financial crisis and fell again last year to around a quarter of the number seen in 2012,” Roe added.

“The number of borrowers who didn’t repay when their mortgage ended remained very low and most of these borrowers did repay within a few months of the term ending.

“Lenders offer a range of support to anyone worried about their finances, with teams of trained experts ready to help.”

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