ML-Implode News - Australia Regulator Tamps Down On Proliferating Interest-Only Loans

High but rising household debt levels, elevated property prices and ultra low interest rates has made Australian Prudential Regulation Authority Wayne Byres decidedly uneasy about the nation's preference not to repay their loans but simply service the interest.
They have therefore told the banks that less than 30 per cent of new mortgages can be "interest only" - which is substantially below the last reported figure of 38 per cent of total loans. In fact, the percentage of interest-only loans has not been below 30 per cent since 2008.

And while many would dismiss comparisons between the rise of interest only lending in Australia and the teaser rate loans that lured in sub-prime borrowers in the US ahead of its 2008 housing crash, a market propped up by artificially low borrowing rates is a recipe for disaster.

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Australia Regulator Tamps Down On Proliferating Interest-Only Loans