IO mortgages - should banks take some of the risk?

chucknorris

Why should the banks take on additional risk without additional reward? Risk and reward go hand in hand (as do losses unfortunately), the reward would be a potential gain in equity, if the bank has no opportunity to share the reward why should they share the risk? Additionally I would imagine that the banks want to be in banking not playing at property investing.

E.King

The_White_Horse wrote: »

If Banks are willing to lend IO mortgages, would it not be better that they will only do so if the mortgagor takes out an approved repayment plan - but if that plan does not work out, then the bank agrees to accept whatever is in the pot after the mortgagor has paid in for 25 years - or whatever term is agreed.

If the bank is not willing to accept any risk, when offering risky products, then perhaps they should just offer bog standard repayment products.

You sound like one of these people who think life should be fair. At some point you learn life is not fair, and banks always win one way or another.

Most of these people on interest only will get repossessed when interest rates go back to normal. The bank will off load the properties quick at auction and either chase the old owner or get bailed out from the governemnt.