Another Scandal In The Making
The FT reports that first-time buyers and others are taking out interest-only mortgages, with no identified means of capital repayment.
This leaves them dangerously exposed to financial calamity, or being forced to trade down the property ladder to pay off their mortgage.
The increase in interest-only home loans has led to fears of another endowment style mis-selling scandal.
The Financial Services Authority (FSA) has noted that interest-only mortgages are one of the top "emerging retail risks" and drew attention to "an increasing number of mortgages.. with the lender not recording that there was a linked repayment vehicle in place".
People are in danger of mortgaging their future, without any hope of paying off the debt. A very foolish thing to do.