Blog: Interest-only mortgages fall further from grace

Some, such as RBS and Coventry Building Society, no longer offer interest-only mortgages to first-time buyers, with RBS saying it is "prudent for first-time buyers to build up equity in their property by reducing capital from day one". This sounds sensible, but even if you took out a repayment mortgage you pay back little capital in the early years. A year or two on an interest-only mortgage until the first-time buyer is in a stronger financial position makes little difference. RBS worries about first-time buyers at risk of negative equity. However, with most lenders no longer lend...