Moody’s Talks – Structured Finance Podcast
April 13th, 2018 (8.30mins)
In the next instalment of our Structured Finance podcast series, analysts from our EMEA consumer team, Gaby Trinkaus and Steven Becker, discuss how borrowers that intend to refinance their interest-only owner-occupied mortgages at maturity with an amortising product may not be able to do so given age constraints. Equity release products are an alternative, subject to some constraining factors.
Refinancing owner-occupied loans today will avoid future affordability constraints. However, IO buy-to-let (BTL) borrowers also face future constraints from the prospects of lower yields.
We discuss how interest rates and regulatory changes influence a large share of BTL interest-only loans that are refinanced or repaid ahead of their maturity date, reducing the risk of a large share of loans maturing in a bearish economy, amid weak housing markets and restrictive refinancing options.