Springhill korea anti-fraud: Warning to borrowers over interest-only mortgages

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Warning to borrowers over interest-only mortgages
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• Borrowers with interest-only mortgages have been
  urged to seek advice after a leading banker
  raised concerns over the number of people
  struggling to repay their loans.
• New Barclays chief executive Anthony Jenkins
  predicted this week that interest-only mortgages
  may be the next big mis-selling scandal. He
  identified the loans as a likely source of future
  complaints and said the bank, which has a large
  chunk of interest-only loans on its books, had
  already seen thousands of borrowers with problems
  repaying their capital.

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• Interest-only loans work by letting the borrower
  pay the interest first and clear the actual
  capital at the end of the term. They sold in
  massive numbers during the housing market boom,
  when homeowners and lenders were confident that
  house prices would continue soaring and enable
  capital to be repaid with sale proceeds.
• But some eight in ten people with interest-only
  mortgages maturing over the next decade have no
  adequate repayment strategy in place, according
  to the Financial Services Authority (FSA), which
  described the scenario as a ticking time-bomb.
• The problem for borrowers has been exacerbated by
  a marked tightening of lending criteria. Where
  they used to offer interest-only loans to those
  with just 10 per cent deposits, most lenders now
  demand equity or a deposit of at least 50 per
  cent.