Interest-only mortgages are 'a ticking time bomb'
www.moneynews.co.uk > Mortgages > Interest-only mortgages are 'a ticking time bomb'
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Interest-only mortgages are 'a ticking time bomb'
Fri 28th Oct 2011
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Paul Holmes, chief executive officer of Firstrung, said unless there is an upturn in the property market, interest-only products do not really make sense, as buyers are paying more than they would to rent and run the risk of price drops meaning their borrowings will outweigh the value of their home at the end of loan's term.
He commented: "We're headed towards [a situation] where property is not going to increase in value and people are going to be left with debt because they have got an interest-only mortgage."
Elsewhere, Ray Boulger, senior technical manager at John Charcol, claimed the UK is unlikely to see extremely long-term mortgage deals anytime soon as the present market is making it difficult for lenders to offer attractive terms to investors.
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