More borrowers are turning to second-lien mortgages as credit-card rates soar
- Second-lien mortgages are gaining popularity as borrowers tap into their home equity for cash
- Wall Street expects $11 billion of second-lien mortgages and home-equity lines of credit to be turned into bond deals this year
- Credit-card rates hitting record highs are driving homeowners to opt for riskier second-lien debt
- Unlike in the past, borrowers accessing home equity now have prime credit scores and meet stricter lending standards
- The second-lien market is expected to continue growing as the Fed is not expected to significantly cut rates this year
Second-lien mortgages, also known as "piggyback" loans, are experiencing a resurgence as homeowners seek to access their home equity for cash. With an estimated $30 trillion in equity in their homes, borrowers are increasingly relying on home-equity lines of credit and second-lien mortgages as a liquidity spigot. Wall Street analysts predict that this year, around $11 billion of second-liens and home-equity lines of credit will be converted into bond deals, a significant increase from previous years. The rise in popularity of second liens can be attributed to soaring credit-card rates, which have reached record highs. As a result, more homeowners are opting for riskier second-lien debt, which sits behind a first mortgage. However, unlike in the past, most borrowers accessing their home equity now have prime credit scores and meet stricter lending standards. The second-lien market is expected to continue growing, as the Federal Reserve is not expected to make significant rate cuts this year. Overall, the resurgence of second-lien mortgages provides homeowners with an economical option to access cash while leveraging their home equity.
Factuality Level: 3
Factuality Justification: The article provides some relevant information about the increase in popularity of second-lien mortgages and home-equity lines of credit. However, it lacks depth and context, and it includes some biased statements without providing a balanced view of the topic. The article also contains some unnecessary details and repetitive information.
Noise Level: 3
Noise Justification: The article provides relevant information about the increasing popularity of second-lien mortgages and home-equity lines of credit. It includes data and quotes from industry experts to support its claims. However, the article contains some repetitive information and could benefit from more in-depth analysis on the potential risks associated with this trend.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the increasing popularity of second-lien mortgages and home-equity lines of credit, indicating potential impacts on the housing market and financial institutions.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article primarily focuses on the growing trend of second-lien mortgages and home-equity lines of credit, which is relevant to financial topics. There is no mention of any extreme events or their impacts.
Public Companies: Rocket Mortgage (RKT)
Key People: Eileen Tu (Vice President of Product Development at Rocket Mortgage), Laurie Goodman (Fellow at the Urban Institute)
Reported publicly:
www.marketwatch.com 
