Why are second mortgage rates higher?  Second mortgages are used by borrowers to avoid PMI (Private Mortgage Insurance) or to attain a higher LTV on a home purchase.  The rates are higher because they are riskier loans.  In the event of a foreclosure the first mortgage is paid off before the second lien is satisfied.  If there are not enough funds to pay off the second mortgage, the second lien holder takes a loss. 

Additionally, if a homeowner files for bankruptcy the second mortgage is not guaranteed to be paid off.  Therefore, the lender who makes a loan in the form of a second mortgage assumes a higher risk. The lender offsets that risk by charging a higher rate.  Furthermore, most second mortgages are held in the lender's own loan portfolio rather than being sold to in the secondary market. 

Today there are fewer lenders offering second mortgage products and those that do have stricter guidelines than in the past.  Therefore, it is harder to obtain a second mortgage.   As with first mortgages, second mortgage rates vary depending on credit worthiness, ability to pay and combined loan to value ratio.