Second home mortgages skyrocket

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Real Estate

The number of buyers who locked in mortgage rates for second homes soared 178% year over year in April, marking the 11th straight month of 80%-plus growth, according to a recent Redfin study.

Redfin Chief Economist Daryl Fairweather said the numbers are likely exaggerated because demand for second homes dropped 24% year over year in April 2020, the month after the coronavirus pandemic permeated throughout the U.S. Still, second-home mortgage rate locks are holding steady at more than double pre-pandemic levels.

“The combination of the wealthy becoming wealthier, remote work turning into the new normal and low mortgage rates is creating an ideal environment for affluent Americans to buy vacation homes,” Fairweather said. “As long as the economy continues to grow, I don’t foresee demand for second homes slowing down anytime soon.”

The rise in demand for second homes is more than twice the increase for primary homes, with the number of buyers who locked in mortgage rates for primary homes rising 78% year over year in April. That’s a record jump too, Fairweather said, but should also be taken in context, as demand for primary homes dropped last April due to the pandemic.

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