The total interest-only mortgage stock declined by 17% in 2024, new figures published by UK Finance have revealed.

The banking trade body’s latest data also showed that this total has reduced by 78% in number and 61% in value since 2012.

UK Finance was publishing its interest-only mortgages data, covering pure and partial interest-only homeowner mortgages, as well as maturity and loan-to-value (LTV) profiles.

There were 541,000 pure interest-only homeowner mortgages outstanding at the end of 2024, 18.5% fewer than in 2023. The figures also showed that there were 174,000 partial interest-only (part and part) homeowner mortgages outstanding at the end of 2024, a total 13% down compared to 2023.

“Lenders’ proactive communications strategies continue to ensure that those with historic interest-only loans have plans and the ability to repay, with tailored help available for those who do not,” said director of mortgages at UK Finance, Charles Roe.

“The interest-only book has shrunk in size each year since the end of the financial crisis and is now around one fifth of the number seen in 2012, when these data were first collected.”

Within the total, the number of interest-only loans at 75% LTVs and above fell by 25.7% in 2024, and UK Finance revealed that loans at these higher LTVs now make up just 5% of the total – compared with 36% in 2012.

The number of interest-only loans set to mature by 2027 shrank by 67,000 in 2024 to 120,000 loans, a fall of 35.8%.

“It is particularly encouraging that the number of interest-only loans at higher LTV ratios has fallen sharply – around twice the overall contraction – with a similar movement in those loans set to mature over the next two years,” Roe added. “Those customers whose loans are theoretically most at risk continue to redeem ahead of time, reducing the risk profile of the remaining interest-only book.

“The small number of borrowers who do not repay immediately upon maturity remains very low, and data consistently indicate the vast majority of these do in fact repay in full over the first few months following the end of term.”

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