Saturday, Dec 02, 2006

Interest Only mortgages are A-OK

Citywire: Mortgage lenders dismiss credit crunch fears

Fears of a future debt crunch for mortgage borrowers who take out interest-only home loans without any plan for how they will repay the borrowing are unfounded, according to the Council of Mortgage Lenders (CML).
CML Director General Michael Coogan said: "The view that interest-only mortgages are being used as a dangerous short cut around affordability barriers is not borne out by our research."

Posted by little professor @ 08:15 AM (455 views)
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5 Comments

1. harold said...

"The view that interest-only mortgages are being used as a dangerous short cut around affordability barriers is not borne out by our research." CML Director General, Michael Coogan

"He would say that wouldn't he?" Mandy Rice-Davis.

Saturday, December 2, 2006 12:13PM Report Comment
 

2. Rubberneck said...

In my time of viewing links posted on this site I have never read two pieces of such self-interested propaganda as this and the last (Azztez article). I'm flabbergasted that these people can post such obvious untruths painted as "news" with presumably the sole intention of selling more interest only mortgages to FTB's in this case and encouraging morebuy-to-let mortgages in the other. Shame on them. All I can say is when it comes time for these snake oil salesmen to show themselves we must be in for some sort of seachange. "I see a bad moon rising".

Saturday, December 2, 2006 12:57PM Report Comment
 

3. Enuii said...

What research? Interest only mortgages have not been around/used long enough and have not had to endure the test of weathering an economic downturn. More meaningless froth.

Saturday, December 2, 2006 09:04PM Report Comment
 

4. sirgoogle said...

Enuii

Agree. It took quite a long time for the Endowments pyramid scheme to be found out. IO mortgages are going to be the same - as they rely on a rising market to clear the capital. There will be tears before bedtime on this one.

Sunday, December 3, 2006 12:47PM Report Comment
 

5. paolo88888 said...

However for many years now, HPI has been above the mortgage rate, so even if you never make any repayments then after 25 years the house should sell for enough to pay off the mortgage and make a profit, even having enjoyed the utility value of living in the house for a quarter of a century.

Too good to be true? Well then try the contrapositive, which implies that HPI must fall below the mortgage rate eventually.

Sunday, December 3, 2006 10:03PM Report Comment
 

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