The Co-operative Bank is to withdraw its interest-only mortgage range, it has announced.
From 8 May, new mortgage customers will only be able to take out mortgages on a capital and repayment basis.
Existing interest-only mortgage customers will not be affected by the change.
The Co-op said they will still be able to switch to any product from the lender's mortgage range for the same amount of borrowing on an interest-only basis when they come to the end of their deal.
The lender said the changes will also apply for mortgages offered through Britannia and residential mortgages offered through Platform, the Co-op’s intermediary arm.
It said that a combination of factors including falling house prices and uncertainty about the direction of interest rates have led to a rapid decline in demand for these loans.
The lender added that currently less than 10% of its new mortgage customers are taking out mortgages on an interest-only basis.
James Hillon, head of mortgages, said: "The mortgage market has changed greatly in the last four years and as a responsible lender we closely monitor these developments."
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