Reports at the weekend warned that banks and building societies are making it harder for customers to arrange interest-only mortgages with high street bank Santander insisting on at least a 50 per cent deposit before such a mortgage can be agreed. Changes in the eligibility criteria also mean that customers who already have a mortgage with that lender but wish to move home are finding their options severely limited either having to meet the tougher standards or change over to a capital repayment mortgage with the likelihood of higher payments. Interest-only mortgages are typically sought by the self-employed, couples getting close to their retirement age, or households in which one partner has taken a career break to raise a family. As one example of these tougher criteria, the Lloyds Banking Group last week said that it would no longer be accepting cash savings as the sole means of mortgage repayment, also demanding a 20 per cent stake of other assets. Lenders which fall under the purview of the group include Lloyds TSB, Cheltenham and Gloucester and the Halifax all of whom are calling for a 25 per cent minimum deposit for interest-only mortgages. John Charcol senior technician Ray Boulger told the BBC that such tight criteria were “counterproductive”, adding: “Quite a lot of people with interest-only mortgages will now find that it actually becomes impossible to move. That means less activity in the housing market and that’s bad for the UK economy. It affects everyone in the chain.” However, although lending has fallen as criteria have got tougher, figures from the latest Mortgage Monitor survey show that last month saw 58,610 mortgage approvals a 29 per cent increase compared to January 2011 and the highest rate since December 2009.