As the housing boom lifts the median home price way beyond the budget of huge numbers of Americans, middle-income home buyers are increasingly turning to interest-only mortgages - a decision that could well come back to haunt both them and the banks behind the loans later on.

Many use interest-only mortgages to push their borrowing and buying power as far as it will go. On average, they borrow 94 percent of the value of their homes. Even though they are paying only interest, they devote a whopping 45 percent, on average, of their income to debt service.

"Everyone's fear is what happens when rates go up and people are stuck."

"Lenders have more to lose than borrowers."