A spokesperson for Coventry Building Society – the UK’s second-biggest mutual in 2016, according to industry data – also confirmed it had no plans to offer new interest-only products.
Several lenders have continued to offer the deals, despite a contraction in the market following the FCA’s clampdown – but they often come with strict affordability criteria.
Virgin Money requires a combined minimum gross income of £50,000, a maximum income multiple of 3.5 and evidence of a suitable repayment strategy.
NatWest, which offers the loans through its premier banking service, requires a minimum income of £75,000 a year, before discretionary bonuses, and a repayment plan approved by the lender.
The Nottingham also offers interest-only products, requiring a description of a repayment vehicle that is on the lender’s approved list and has been in place for six months before the mortgage application is submitted.
David Hollingworth, associate director for communications at London & Country, said while interest-only would not become a mass market, options for borrowers were increasing.
He said: "The vast majority of first-time buyers will be struggling to meet the requirements of the interest-only market.
"Nationwide are the big first-time buyer lender and may think that approach has benefited them in terms of simplicity.
"But the more lenders who are coming in helps to give more options to people who want to consider interest-only.
"You will have a good number of borrowers who have always used interest-only and had loans from before the credit crisis. They may be feeling the number of options open to them is quite limited but has improved, therefore they have more ability to shop around.
"There will be some good-quality interest-only borrowers out there, and some lenders may think they went too far initially in shutting the door on those borrowers."
simon.allin@ft.com
