Growth in Second Mortgages during the First Quarter of 2014


The demand for home-purchase mortgages plunged considerably during the first quarter of 2014 and so did refinance. At the same time, second mortgages experienced considerable growth. Existing homeowners seem more confident about borrowing more against their property. This trend is expected to remain.

One of the leading lenders in the United States, Bank of America, reported an increase of 75% of the volume of second mortgages from the first quarter of 2013 to the first quarter of 2014. The volume went up from $1.12 billion to $1.98 billion. The largest lender in the country, Wells Fargo, experienced a considerable increase in home equity lending as well.

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The double digit increase in the volume of second mortgages is expected to remain in the coming two or three years as the housing market recovers. Then it will go back to its traditional annual increase rate which is approximately 5%. After dropping by nearly 50% in 2008, the volume of second mortgages continued its downward trend to 2011. In 2012, the trend was reversed as the mortgage market recovered and rates dropped to a historic low. The volume of second mortgages increased by nearly 21% in 2103 and experts estimate an even higher increase for 2014 despite the higher rates.

The growing demand for second mortgages is explained primarily with the rising home prices. Even though the rates increased on an annual basis, they are still more than affordable ranging from 4.5% to 5.5% in most cases. Applicants with credit score in the high 700’s can expect to secure lower rates. Lenders offer financing up to 85% of the value of the property. All of these secondary factors have a positive effect on the demand for home equity loans and lines of credit and on their volume as well.

The confidence of homeowners will rise even further and this will have an even greater positive impact on the second mortgages throughout 2014 and beyond.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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