The current housing boom has seen a huge surge in those looking to buy a second home. However, new rules from Fannie & Freddie could put the brakes on those type of purchases.
Ben Eisen and Andrew Ackerman over at The Wall Street Journal report on the Fannie & Freddie rules change that will impact vacation homes. (WSJ)
- What’s the new rule? The new restrictions cap the mortgages tied to second homes or investment properties that lenders sell to Fannie or Freddie at 7%.
- Why the change? Treasury’s view was that second-home and investment properties are less oriented to the missions of Fannie and Freddie to support affordable housing, according to officials at the FHFA, which negotiated the changes with Treasury.”
- What does this mean going forward? Higher rates mostly. The journal reports on Matthew Smith who recently had his offer accepted on a vacation home in Vermont. The mortgage rate turned out to be higher than he expected and his mortgage lender told him that because of the curb from Fannie and Freddie, the best he could get was 3.875%.
Read More at Wall Street Journal
As with most changes happening right, if you were on the fence about buying, these higher rates could deter you. However, if you are gung-ho about getting a second home a half a point rate jump probably won’t dissuade you.