The central tendency of the forecasts of members of the Board of Governors and the presidents of Federal Reserve Banks is for real GDP to increase about 3-1/2 percent in 2006 and 3 percent to 3-1/2 percent in 2007. The civilian unemployment rate is expected to finish both 2006 and 2007 at a level between 4-3/4 percent and 5 percent.
Also, because the debt level is higher over the term of the loan, the interest costs are also larger. For housing investors, the key motivation for using an interest-only loan is clear. By enabling borrowers to sustain debt at a higher level over the term of the loan, interest-only loans maximise interest expenses, which are tax deductible for investors.