U.S. Mortgage Rates by Occupancy: Trends 2020-2024

Interest rates for home purchase loans have climbed sharply since 2020, but the spread by occupancy type tells a bigger story. By 2024, borrowers financing investment properties are paying over 1.3 points more than primary residence borrowers, with second homes now priced much closer to investor loans.

For banks, credit unions, and IMBs, the implications are clear.

• Primary residences retain a relative cost advantage, sustaining demand and aligning with the mission of supporting homeownership.
• Investment properties face headwinds, as nearly 8% rates make rental acquisitions less attractive, so expect lower origination volume but keep an eye on future refinance opportunities when spreads narrow.
• Second homes now carry a higher premium, likely reducing discretionary purchases and reshaping borrower expectations in lifestyle markets.

The takeaway

This environment calls for sharper portfolio segmentation. Use open data to identify the borrower cohorts most sensitive to interest rate differentials. Strategy, not volume chasing, will define success in 2025.