Interest-only mortgages 'can be perfectly rational'

Interest-only mortgages have been described by a leading expert as a "perfectly rational" product for some homeowners.

However, the Council of Mortgage Lenders' (CML) communications manager, Bernard Clarke, has warned that borrowers need to be fully aware of the consequences when taking out such a product.

Recent figures from mform.co.uk found that there had been an increase in the number of choosing interest-only mortgages.

Mr Clarke said the rises should not necessarily make the industry wary, saying: "If they're taking it from an informed point of view then there isn't a need for concern about that.

"If borrowers are taking opportunities later when they remortgage to address the problem then that's fine."

The CML is the UK's leading trade association for the mortgage lending industry.

Representing 98 per cent of the UK's residential mortgage lending, the organisation was created to be a representative voice for the industry, as well as a leading provider of research and market information.

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