Talk Money: June 28

28/06/2016

(Paul Henry)

Forty percent of all new mortgage lending is going to people taking out interest-only loans.

The figures for May 2016 have just been released by the Reserve Bank, showing 47 percent of new lending in the Auckland market is to property investors. Interest-only lending means that there are no scheduled repayments of the principal.

The Reserve Bank says these loans tend to convert to principal and interest loans after a period of time. Only 28 percent of banks' existing stock of mortgages are on interest-only payment terms.