Secondary housing mortgage boom hit amid new lending rules


According to new data, new lending rules and return to the office could prevent a significant increase in demand for loans for the purchase of secondary housing.

Vacation real estate may finally go out of style after a year of isolation, and telecommuting has forced high-income Americans to buy second homes.

The number of buyers who have fixed rates on second home mortgages fell 11 percent year on year in June, the first such decline since the first weeks of the pandemic. according to analysis brokerage company Redfin from Seattle.

“The charm of owning a suburban home still exists – as it was even before the pandemic – but the big boom in secondary homes we’ve seen over the past year is waning,” Taylor Marr, lead economist at Redfin, said in a report. …

The year-over-year decline in mortgages for second homes may be partly the result of stricter lending standards carried out by the federal government.

By early May, both Fannie Mae and Freddie Mac had imposed tighter restrictions on some of the riskier types of loans, including mortgages for second homes and investment properties… These riskier loans could only account for 7 percent of the lender’s total loans after the new standard took effect.

Meanwhile, the number of blocked mortgage rates for mainstream housing in June rose slightly compared to the same period last year.

“This return to the office, along with soaring prices and tighter lending standards for secondary homes, is shifting consumer demand in favor of primary homes,” Marr said in a statement.

June was the second consecutive month that saw a sharp decline in annual growth in interest rates on loans for primary and secondary housing.

Every month for about a year during the pandemic, buyers fixed mortgage interest rates on second homes. at least 80 percent higher than in the same month last year, exceeding growth by more than 160 percent in April. The next month, that number dropped to less than 50 percent year on year.

The staggering drop was followed by a similar sharp slowdown in June – the 11 percent drop recorded by Redfin.

The Redfin report indicates that even though the need for mortgages for a second home has dropped significantly, it still remains above the historical averages.

Part of the reason for the decline in June compared to the same period last year, the report says, was the sheer number of mortgage rate lockdowns recorded in the summer of 2020.

Rest houses have also survived. hot product In rental markets this summer, travelers are booking these homes faster than services like Vrbo and Airbnb can hire new hosts.

With the increase in telecommuting, some loan applicants may seek their main residence in attractive seasonal cities instead of living in the city and buying a second home elsewhere.

“Because jobs make teleworking policies permanent and employees feel more confident in making long-term decisions, many Americans are moving full-time to scenic resort towns rather than buying second homes,” Daryl Fairweather, chief economist at Redfin, said in the report.

Redfin’s analysis was based on data from analytics firm Optimal Blue.

Email Daniel Houston

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