Co-borrowing On the Rise by Home Buyers

The sharing economy gave us co-living and co-working. Now it’s adding a new wrinkle: co-borrowing to purchase a home. 

According to an ATTOM Data Solutions report, 22.8 percent of all purchase loan originations on single-family homes nationwide in the second quarter of 2017 involved co-borrowers – multiple, non-married borrowers listed on the mortgage or deed of trust – up from 21.3 percent in the previous quarter and up from 20.5 percent in the second quarter of 2016, Real Estate Weekly reports. 

“I think it’s the affordability crunch, in terms of home prices, that is pushing buyers to get help from co-borrowers increasingly,” says Daren Blomquist, senior vice president at ATTOM. “And I do think there’s also a cultural piece to this. Both younger generation millennials and some of those families where you do have a lot of international influence, there is a more openness to sharing housing with other members of the family or other generations even. And so that ties into the willingness to see a home not just as an individual investment but as a group investment.” 

In New York City, the outer boroughs experienced the highest number of co-borrowers. In Flushing, Queens, 42 percent of home purchases involved co-borrowers; 30 percent used them in Jamaica, Queens. On Staten Island, 37 percent involved co-borrowing. 

Burdened by heavy student debt and steadily increasing home prices, young first-time buyers are needing help getting over the down payment hurdle. The housing stock New York City can lend itself to the needs of multigenerational living, especially in townhouses, which are fairly easy to reconfigure to a family’s needs. That becomes more difficult in condos and coops, though the combining of apartments might offer a way around it. 

“A lot of them appear to be family related,” says Blomquist of co-borrowers. “The one we hear about most is family and children; parents helping adult children buy a home. You also see two sets of couples – which could still be parents and children, friends, brothers and sisters, those sorts of relationships. And even companies are sometimes in there.”