Mortgage Amounts Reach Record Highs
Mortgage Amounts Reach Record Highs
The average purchase loan amount has reached a new record high: $402,200, the Mortgage Bankers Association reported Wednesday. The higher-priced segment of the housing market continues to perform strongly, the MBA says.
Mortgage amounts have been climbing to new record highs since April 2020, near the start of the COVID-19 pandemic.
Mortgage applications for home purchases were up 17% last week over last year, the MBA reports.
Home buyers are borrowing more as home prices rise by double-digit percentages over the past year. Also, mortgage interest rates have been hovering near record lows. “Since interest rates are lower, monthly payments are lower—even with higher loan balances,” says The Ascent, a Motley Fool financial publication. “This makes it easier for would-be borrowers to get approved for bigger loans.”
Mortgage credit availability is increasing, although still down significantly compared to historical levels, the Mortgage Bankers Association reports. “The growth in credit availability in January coincides with a housing market that is poised for a strong start to the year,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “Improvements were driven by the conventional segment of the mortgage market, as lenders added ARM loans with lower credit score and higher LTV requirements. Despite ARM loans accounting for a very small share of loan applications in recent months, lenders are likely looking ahead to a strong homebuying season by expanding their product offerings.”
While credit availability has improved over three of the past four months, Kan still warns that credit supply is at its tightest level since 2014.
Source:
©National Association of REALTORS®
Reprinted with permission
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