Another benefit of an IO loan is many banks will allow prepayment of interest of up to 12mths....Can appeal to high wealth / income earners. In a year if they have "windfall" income which is one-off such an an employee share plan, CGT etc they can request prepaymnet of interest up to 12 mths. Doubles their tax deduction for loan interest on their IP. This offset the windfall income.
Thereafter they have an "in advance" problem. They must repeat process annually or face a year with no interest deduction.
Also IO loans dont appeal to ...debt averse taxpayers. ie those who dont want to loan but want to smash it fast. IO loans dont allow reductions usually. So its not for a high income earner seeking to build equity by making fast reductions to loan. Try telling a Greek / Italian aged 60 to take an IO loan..Good luck.