Curbs on interest-only loans have cut risks – RBA’s Kent
Regulatory actions have helped reduce risks in what had been a fast-growing sector
Regulatory actions to curb interest-only lending has helped reduce risks in what had been a rapidly expanding area of Australia’s credit market, the Reserve Bank of Australia’s Christopher Kent said today (April 24).
Interest-only loans tend to encourage risk-taking by offering borrowers an introductory period of low payments before they have to begin paying back the principal. The step up in costs can catch many people out.
“Interest-only loans had grown very strongly for a number of years in
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