[SoftTalker]

Disagree. A mortgage is responsible debt, if you plan to live in the house for 30 years why not pay for it over that timeframe? And the house itself will usually appreciate if you take reasonably good care of it.

Zero-down, no-income-no-credit-check mortgages, OK yeah those were a problem.

Credit cards are the degenerate financial product that shouldn't exist, if anything is.

[enlyth]

I'm in the negative for my opinion but I'll still bite.

People don't live in houses on interest only mortgages, they use them as leveraged investment vehicles to speculate, rent out, and then roll them into even more leverage as time goes on.

I have nothing against classic mortgages where you pay the principle off, I have one myself, but I will maintain my opinion that interest only mortgages shouldn't exist despite the unpopularity.

[SoftTalker]

OK should have read your original comment more closely. I missed "interest only" on the first read.

But even on a traditional mortgage, in the early years the vast majority of the payment is interest. How much lower is the monthly payment on an interest-only loan? Are they easier to qualify for? Are the rates the same, or higher than, a traditional mortgage?

I'm not sure I'd want to ban types of financing for types of properties, that seems heavy-handed.

[enlyth]

This depends on where you live, in some countries I believe they don't even exist, but I can speak for the UK where interest only mortgages are meant for landlords, you basically get a mortgage with a minimum of 25% deposit, none of the principle is paid off at any point, you rent out the property and collect the difference between your interest payment and the premium the tenant is paying.

They are normally inaccessible to people who don't already own their own property, even more so by the nature of the higher than usual deposit required, so it's an investment vehicle for already well off people to leverage more money into property and extract money from tenants

It puts upwards pressure on housing prices because you don't just get the family that wants to own a home or the occasional landlord who wants to own and rent out a second holiday house, it's a purely synthetic financial product that lets you take a house out of the market and arbitrage on the difference between your interest payments and the tenant's rent

It is not uncommon for people like this to own tens or hundreds of properties in their portfolio this way, and these are the people crying first and loudest when interest rates go up because their rental yields can no longer cover the interest only payments on the houses they "own". Whatever happened to being on the hook for bad investment decisions? They think they should get special treatment because they're providing a so called service to the tenants

[smallmancontrov]

Increasingly leveraged mortgages are "responsible" to own, but they are terribly irresponsible as policy. It's good to get in early on a ponzi scheme, but ponzi schemes are overall bad things to base an economy on.

Using the word "responsible" to describe something that is good for an individual but bad for society is... a choice.