Justin Paget
The number of mortgage rate-locks for second homes in the U.S. slid 13.1% year-over-year in August, online real estate brokerage Redfin (NASDAQ:RDFN) said in a Thursday report, reaching their lowest point since March 2016. That’s more than twice as much as rate locks for primary homes.
A mortgage-rate lock is a deal between a borrower and lender to secure a certain interest rate on a mortgage for a set period. This protects the borrower from rate fluctuations while their loan application is processed.
The seasonally adjusted drop in second-home mortgages comes against a backdrop of sluggish homebuying demand due to high home prices and elevated borrowing costs.
And the slowdown followed a surge in demand during the pandemic. Mortgage-rate locks for second homes jumped 96.2% above prepandemic levels in October 2020, as “wealthy Americans took advantage of ultra-low mortgage rates at a time when many of them could work remotely from vacation towns,” the report said.
