Canada Gets I/O Loans, US Speculating With Debt
The web site Realtor.org reports that interest only loans are headed to Canada. "A unit of U.S.-based General Motors Acceptance Corp. is offering Canadian home buyers the nation's first fixed-rate, interest-only mortgage for up to 80 percent of a house's value."
"The product will get borrowers into bigger homes, as they can take on a mortgage that is 17 percent larger than one that also calls for the payment of principal."
And a story on home equity loans; "The amount of home equity extracted by U.S. property owners surged to $705 billion in 2004, with most of the money put toward buying new residences, repaying credit-card debt, and funding home-improvement projects. More homeowners are using the cash to purchase investment properties--2.2 million in 2004." That last number is more than all the new homes built in the US.