'Mortgage gap' is developing in UK lending market

A worrying 'mortgage gap' is developing in the UK according to insurance, pensions and investment group LV.

New research from the group has shown that nearly half of the UK's 2.9 million interest-only mortgages (45 per cent) have no specified investment vehicle in place in pay off the loan's capital.

Loans that do not require an investment plan have grown in number over recent years because borrowers have not been required to have one since the early 1990s.

Commenting on the findings, Mike Rogers, LV Group chief executive, said that a previously booming property market had caused many people to guarantee being able to sell their home, use the proceeds to pay off their mortgage and still have enough capital left over to finance the purchase of another property.

"However, this strategy may have been overturned by current and predicted future falls in property prices, he said.

Mr Rogers added that mortgage customers should "seriously consider" investing as much as they can now and at further regular intervals in order to pay off the mortgage capital at the end of their term.

A recent survey by Fairinvestment.co.uk revealed that 44 per cent of women questioned are homeowners paying a mortgage compared with just 37 per cent of men.

Mortgages News posted on 19/11/2008 17:57:02