/biz/ - Business & Finance

>>12883373
https://www.afr.com/real-estate/interestonly-loans-worth-230-billion-trap-650000-warns-morgan-stanley-20190215-h1bbcy

>About 650,000 borrowers with loans totalling around $230 billion are 'trapped' in their interest-only loans and could struggle to refinance, forcing many to sell into already deteriorating property markets, according to investment bank Morgan Stanley.

>Borrowers will need to extend the interest-only period, switch to a principal and interest loan or find a buyer for their property as their low rate terms expire, warns the analysis, which was done in conjunction with AlphaWise, a customised researcher for hedge funds and finance companies.

>"Almost half of interest-only borrowers are 'trapped'," the analysis warns.

>"These households appear high risk on a variety of metrics, and we expect added selling pressure on the housing market when their interest-only periods expire in the next two years."