Lending for affordable rentals has fallen from 5%-6% of all single-family lending to just 2%-3%, with only the best of borrowers now able to obtain a loan for a two- to four- unit building. A researcher takes a look at this credit tightening.
After looking at the data from 14 million mortgages gathered from one-, two-, three- and four-unit properties, here’s what gained from this survey:
The data shows a clear order of risk. Loans on single-unit, owner-occupied houses carried the lowest chance of default. Interestingly, investors in three- to four-unit buildings came in second, ahead of other owner-occupied properties. We attribute this to the additional cushion provided with the income from one or two more tenants.