Following on from comments this week by the Reserve Bank and APRA, new research has emerged showing interest-only mortgage borrowers tend to be poorer money managers and show up as "risk flags" to financial institutions. An apparent propensity to spend their way further into debt and forgo savings when faced with higher costs, and an increased tendency to sell their property if interest rates rise, make interest-only borrowers a higher risk, the domain.co.nz website reports, citing two Morgan Stanley analysts.The analysts from Morgan Stanley's AlphaWise research arm warn that, if the exposure to interest-only risks aren't further reined in by regulators and major lenders, banks could see a rise in non-housing loss rates, leading to further instability in Australian property and debt markets."This gap is particularly large among owner-occupiers, where [around] 20 per cent of interest-only loan holders would consider selling versus around five per cent of principal and interest (P+I) borrowers, suggesting that being on interest-only is a risk flag," said the analysts, led by Richard Wiles and Andrei Stadnik.Slightly more than half (53 per cent) of interest-only borrowers are likely to use credit cards or consumer finance to manage higher costs, compared with 29 per cent of principal and interest borrowers.These comments add to uncertainty, with UBS researchers suggesting up to A$500 billion worth of Australian mortgages are built on so-called "liar loans" - politely referred to as "not-completely-accurate applications" by domain.com.au.