With affordability mortgage products on the rise, one sector that has seen considerable growth is piggyback loans. The higher LTV associated with these loans implies greater credit risk, analysts said.

Glenn Costello, a managing director at Fitch Ratings, explained that since second-lien borrowers have close to 100% LTV, the lack of accumulated equity therefore restricts their ability to maintain or improve their homes. Additionally, the loss severity is higher for second-lien loans.

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