Second Home Mortgages Becoming Less Risky


Traditionally, the primary home mortgages have been considered to be much safer than the second home loans. However, a new study suggests that the recent housing market crisis may have reversed this trend. Currently, the second home mortgages have a lower delinquency rate and lower default rate.

Since 1998 the average percentage of mortgage loans, which have been used for the purchase of properties, which are neither primary residences, nor investment properties, has been 4.76%. During the housing market crises this percentage experienced a considerable plunge, but went up soon after. One important figure indicating this is the increase in the purchase of vacation homes from 2012 to 2013. It accounted for 29.7%.

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There are two factors which produced the major increase in the purchase of second homes over the past year. The primary one is the huge drop in home prices. The hottest markets for second home purchases are Florida, which experienced a plunge in home prices of 44% between 2006 and 2012, Arizona, where prices dropped down by 46%, and California where the decrease was 40%. Some 34% of all second home mortgages were originated in these three states in 2013. The other factor is the affordability of the mortgage loans due to the historically low interest rates.

The profiles of the second home buyers reveal that they are highly reliable borrowers. These buyers are typically in their late 40’s and come from two-income households. They place a large down payment which is well over the required 20% for primary residence purchase. The have very high credit score, typically in the high 700’s or higher. All of these profile features make the second home buyers a top choice for lenders given the tighter credit standards at present.

The number of second home purchases and mortgages is projected to increase in the coming years as the US population continues to age.



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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