Let me explain it to you. It comes from the capital structure theory called the “pecking order” theory of Myers and Majluf (1984) and Myers (1984). The idea is that financial flexibility gives you options to take care of investment opportunities. If I take out an interest-only loan, I still can make the same payments and replicate the results of a fixed-rate mortgage, but am not obligated to do so. If an investment opportunity arises, or if I simply have a cash flow shortage, I can make the interest-only payment and not default on my loan. If, instead, I had a fully amortizing loan, I lose the option to pay interest only and will lose my house if I can’t pay the difference in the interest-only loan and the fully amortizing loan.