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It turns out that interest rate loans don't peform as well as other loan products.  So, Freddie Mac will stop buying them in the fall. 

Last week, Freddie Mac announced that on September 1, 2010, the company will cease purchasing and securitizing interest only mortgages, including Freddie Mac Initial Interest^SM fixed-rate and adjustable-rate mortgages.  Interest only mortgages, including Freddie Mac Initial Interest mortgages, provide for interest-only payments for a specified period of time beginning with the first monthly payment after the note date, and principal and interest payments on a fully amortizing basis for the remainder of the mortgage term.

Given the continued lackluster performance of the economy, this is no surprise.  And in the end, probably better for consumers.