Source: National Mortgage News
Homebuyers in Australia soon can choose what’s being called a “never-ending” mortgage in an attempt to overcome that nation’s affordability crisis. According to a report in The Sunday Telegraph, ING Direct, the nation’s fifth largest residential funder, will originate loans that have no fixed term and no requirement to repay any principal at all. At current rates, the interest-only loans would cut repayments on a $300,000 mortgage by $5,000 a year, the newspaper reported. Repayments would be kept to a minimum, allowing borrowers to benefit from capital growth in their property. “People are needlessly being denied the chance to buy a property while prices spiral rapidly out of their reach” said ING Direct CEO Don Koch. He added that “There is an urgent need to provide more affordable options and borrowers should be able to choose whether they want to repay the capital, or not.” During the U.S. housing boom (which is now being called a bubble) American homebuyers used interest only loans in a similar fashion, but investors speculating on home values also used the product. In America IOs are still being originated but at much reduced volume levels, according to figures compiled by the Quarterly Data Report, a National Mortgage News publication.