Interest only needs understanding not innovation

“There is a challenge between innovation and understanding,” said Gould. “I would like to see more understanding of the applicability of interest-only.

“If people actually sat down and thought about it fully then as a long as it is appropriately provided I don’t think there is a problem with it.

“Whizzy, new fangled products which are difficult to understand are the cause of the problem.”

Gould said many mainstream lenders had withdrawn from or tightened criteria around interest-only mortgages because of the labour-intensive assessment required for this now niche product.

He said: “Blaming the Mortgage Market Review for high street lenders’ withdrawal from this category of product is not wholly true. Interest only has become a specialist product and as with other specialist products they are usually delivered by specialist lenders.

“This is now a very small market. For the likes of Santander and Barclays this is a mere blip on their landscape, it makes sense for them not to bother with it.”

The Bucks views interest-only mortgages as a “perfectly appropriate solution” depending on the applicant’s circumstances and individual case-by-case underwriting.

Gould said there was no need to be nervous offering an interest-only mortgage to a retired borrower whereby the exit route was sale of property on death.

He added: “For elderly borrowers we insist on independent legal advice and that family members are notified. As long as interest-only is for the right person for the right reasons we don’t see the problem with it.”