United Wholesale Mortgage (UWM), the second-largest U.S. provider of mortgages through brokers, recently announced that it will once again be expanding access to interest-only mortgages. Benzinga had the chance to speak with UWM CEO Mat Ishbia about the change in policy and whether it is indicative of a dangerous trend in U.S. lending habits.

What Is An Interest-Only Loan?

When a borrower gets an interest-only loan, he or she must make only the interest payments on the principle balance for a set period of time. For a U.S. mortgage loan, this time period is typically five or ten years.

What makes interest-only loans particularly risky is that the borrower’s monthly payment often makes a large jump at the end of the interest-only period when he or she must begin paying down the principle of the loan.

Reckless Lending?

Prior to the Financial Crisis, many banks were…

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