Mortgage customers falling into interest-only repayments trap
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MANY mortgage customers are opting for interest-only repayments on their own homes and failing to pay off any mortgage debt despite rates hitting their lowest ever levels.
Homeowners … are turning to interest-only repayments but experts warn of the dangers of doing this because rates will eventually rise. Picture: News Corp Australia Source: Getty Images
A large portion of borrowers are failing to make any headway into their borrowings by choosing interest-only repayments in what experts say is a dangerous move that could lead them to financial trouble when rates do rise.
ING Direct figures show about one quarter of owner occupiers taking out new loans opt for interest-only repayments.
ING Direct’s manager of mortgage products Loren Wakeley said there had been an increase in the past five to ten years of owner occupiers paying interest-only on their home loans.
“At the moment there are definitely more owner occupiers that are choosing interest-only loans,’’ he said.
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