Emailed in by Lola, from The Telegraph, which devotes a lot of column inches to pushing 'equity release' schemes:
Interest-only mortgage holders with no way of paying off their loan could be handed a lifeline, as major banks look to get these troublesome customers off their books.
Virgin Money has signed a deal with one of the biggest equity release providers, insurer Legal & General. It offers customers the opportunity to switch from an existing interest-only loan to a lifetime mortgage with the insurer.
(And yes, the article contains a link to another paid for puff piece pushing this.)
Hey ho. It's a sliding scale of twattery:
1. In the good old days, you could pay off a mortgage in ten or fifteen years, most of the monthly (or weekly?) payments were principal and some of it interest. The outstanding loan was paid off quickly.
2. House prices have been pushed ever higher and nominal interest rates ever lower, so a normal first time buyer mortgage can only be paid off over twenty-five to thirty years. Most of the monthly payments are interest and some of it principal. The outstanding loan is paid off more slowly.
3. Take it one step further, we have the interest-only mortgage. All of the payments are interest on none of it principal. The outstanding loan is not paid off at all.
4. The final step is equity release; there are no regular payments and the outstanding loan increases over time until it has swallowed up the entire value of the home. The interest-rate is correspondingly higher.
So, having mucked up by allowing people to move to level 3, they think they can fix things by letting them move to level 4.
Hmm.
Fits in nicely with the Home-Owner-Ist narrative, hard working home-owners with their justly deserved unearned land price gains, for which they clearly never paid, victims of those evil banks (who pumped up their unearned land price gains) being bailed out by those generous insurers, who will ultimately claw it all back again, if not, they'll just be bailed out by the taxpayer.