Danish paper explores prevalence of interest-only mortgages
Research shows ‘risky borrowers’ may prefer interest-only mortgages
A working paper published by the National Bank of Denmark has found a greater share of interest-only mortgage debt is held by families with fewer liquid assets and higher loan-to-value ratios compared with other loan types.
Loan Types, Leverage and Savings Behaviour by Andreas Kuchler suggests this could occur because those families do not "fully" utilise the lower instalments to "increase their savings or to amortise more expensive debt".
Since their introduction in 2003, interest-only loans
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