Nearly half of the UK’s top 100 first-time buyer brokerages wrote no interest-only business for first-time buyers in 2025, according to Gen H.
Research from residential lender Gen H found that interest-only mortgages remain underrepresented in the first-time buyer market, with less than 0.5% of all first-time buyer mortgages being interest-only or part-and-part.
This is despite the Financial Conduct Authority (FCA) consulting on widening interest-only access for first-time buyers.
The FCA’s consultation, which closes on 28 July 2026, proposes changes to its interest-only framework as part of wider reforms aimed at helping first-time buyers and other underserved borrowers get onto the property ladder.
Gen H’s research indicates that, should these proposals be implemented, the intermediary market may not be positioned to quickly close this gap in distribution.
Its analysis found that nearly half (47%) of the top 100 first-time buyer brokerages wrote zero interest-only business of any kind for first-time buyers.
Of the 53 brokerages that wrote any interest-only business for first-time buyers, this type of mortgage comprised a median of just 0.25% of their own first-time buyer volumes.
The percentage of interest-only business across the 53 brokerages varies widely, with just seven firms doing over 1% on interest-only (more than four times the median).
DAs MORE LIKELY TO RECOMMEND INTEREST-ONLY
It also found that directly authorised brokerages were twice as likely as appointed representatives to use interest-only products with first-time buyers.
Across the whole UK intermediary market, less than 0.5% of first-time buyer mortgages are interest-only or part-and-part.
Since launching its own interest-only proposition in June 2025, Gen H said 18% of its interest-only and part-and-part applications have come from first-time buyers.
This is 7.5 times higher than the industry average, where less than 2.5% of all interest-only products are taken by first-time buyers.
Gen H added that 30% of its part-and-part applicants are first-time buyers.
In its consultation paper, the FCA describes its proposals as targeted rather than a total relaxation of rules around interest-only lending. However, its own feedback statement (FS25/6, December 2025) found that, since 2013, sales of any type of interest-only product to first-time buyers have remained below 0.5% of all sales.
The figure has not shifted even after the FCA retired its more restrictive interest-only guidance, FG13/7, earlier in 2025. Gen H said this suggests the intermediary market may still be hesitant to embrace these products for first-time buyers.
UNDERUTILISED PRODUCTS
Sara Palmer, sales and distribution director at Gen H, said: “A year on from launching our interest-only proposition, we have been really pleased to see so many first-time buyers take an interest only mortgage with us.
“When we look at the cases, we see there’s no other way the affordability could’ve worked – these are mortgages that are fine-tuned to the borrower with the help of their broker.
“These are clients that brokers weren’t previously able to support. In targeting affordability constraints or helping keep monthly payments lower, interest only products can create truly incremental homeowners – and we’re on a mission to help the intermediary market get comfortable and confident advising on these underutilised products.”
TIME TO REVISIT INTEREST-ONLY
Richard Merrett, managing director at Alexander Hall, said: “Interest only mortgages have been saddled by stigma since the financial crash, and I can appreciate how the intermediary market approaches these products with great care.
“But today’s regulatory environment is materially different; lenders use much stricter criteria and brokers are required to demonstrate suitability as they advise their clients.
“It’s time to revisit the interest only structure with a view to resolving the abiding affordability challenges that so many aspiring homeowners face.
“Brokers don’t typically recommend interest only solely because the customer doesn’t want to pay capital off – it is more about structuring the monthly payment to fit their budget.
“This might be to suit income structure, for example, if they receive an annual bonus, or because they are deferring making capital reductions whilst they spend money on the home or other immediate priorities.
“A great example of this is with nursery fees – many people buy a new home once they have a child, and may have a temporarily raised outlay prior to them starting school. Interest only can be a great way to reduce the monthly outlay initially to ensure payments are comfortably manageable with a view to prioritising repayment in the future.”
