The average mortgage in the United States has set a new record high amid increasing interest rates and falling demand, the Mortgage Bankers Association reported this week.
The average loan size to buy a home stands at $453,000, according to Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
House prices have been on the rise in the US, as demand has outstripped the supply of homes for sale. Prices were up 18.5% year on year in December, according to the most recent report from property data provider CoreLogic.
At the same time, demand for mortgages is decreasing. According to the MBA, the volume of loan applications decreased 5.4% during the second week of February from one week earlier, and was 7% lower than during the same period last year.
The fall in demand has been attributed to rising interest rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.05% from 3.83%, the MBA says.
“The 30-year fixed rate saw the largest single-week increase since March 2020 and was above the 4 percent mark for the first time since 2019,” Kan said.
The US Federal Reserve is expected to introduce a hike in interest rates in March in an attempt to curb soaring inflation, which could mean that consumers will see their borrowing costs rise further.
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