The true cost of no-cost mortgages

So-called no-cost mortgages (NCMs), in which closing costs are wrapped into the interest on the loan, have attracted some controversy as they have gained popularity in the US. Critics have accused banks of misleading customers over the true cost of borrowing - but no-cost mortgages are a tricky product for lenders, too. Untidy calculations on the likely prepayment behaviour of no-cost loans could leave banks with assets they cannot securitise, or investors with securities worth less than they ba