Housing crisis: Economist says curbs on interest-only lending for investors could be partial solution to rocketing house prices

PHOTO: Cameron Bagrie on The AM Show. The AM Show/Getty

Property investors are increasingly taking out interest-only mortgages, making it easier for them to pay off their lending than owner-occupiers.

And a prominent economist believes fixing that imbalance could be key to partially solving the housing crisis, at least on the demand side.

“We’ve got a fundamental problem here,” economist Cameron Bagrie told The AM Show on Tuesday. “There’s a mismatch here between the economic and the social side of the ledger, the gap between the so-called haves and have-nots.

“The haves tend to be the Baby Boomers, and they’re the lot that tend to vote. It’s little wonder the political dial is turned in favour of housing as opposed to knocking this thing on the head. We’ve got a shortage of supply.”