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Average Mortgage Size Hits New Record High As Home Prices Increase

Even if you’re not looking to buy a home right now, you’re probably still aware of how hauntingly terrible the housing market is right now. People across the nation are dealing with one of the priciest housing markets ever.

On social media, people are trying to make light of the entire situation. Take for example this tweet that features a house that just might sell above the asking price after one day on the market.

https://twitter.com/travisakers/status/1492261668927143937

This has all been going on for a bit, but a new record has actually just been set.

According to CNBC, mortgage applications to buy a home just fell 1% last week. The overall volume was 7% lower than this same week exactly one year ago. This means that mortgage demands are falling, which is due to a high rise in interest rates.

“Purchase applications saw a modest decline over the week, with government purchase applications accounting for most of the decrease. Prospective buyers still face elevated sales prices in addition to higher mortgage rates. The heavier mix of conventional applications again contributed to another record average loan size at $453,000,” Joel Kan, an MBA Economist, said to the news outlet.

People can’t seem to keep up with the price of homes, which is due to the steadily climbing demand for them. The overall prices were up 18.5% in December compared to last year.

Mortgage rates are increasing due to the rise in Treasury yields. This has all caused application volume to decrease by 9% this week. The key points here are that 30-year fixed-rate mortgages with loan balances of $647,200 or less increased to 4.05% and were previously at 3.83%.

There are very few applications to refinance a home loan compared to last year.

Rent Increases for Householders

Not only is it a difficult time to purchase a home, but it’s tough for all the renters out there, too.

For those who can’t afford to own a home yet, rental costs are also rising. According to Redfin, the average cost of rent nationwide increased by 14%. However, in select cities, the number is closer to 30% instead. This is the case for more popular cities such as New York, Portland, Miami, and Austin, which are already known for higher costs.

At the end of the day, the buying and renting markets tie into one another.

“The growth in mortgage payments has been driven by both climbing prices and climbing mortgage rates. And those rising mortgage costs push more potential homebuyers into renting instead, which pushes up demand and prices for rentals. In addition, mortgage rate increases are accelerating, which will cause both mortgage payments and rent to grow throughout 2022,” the Redfin Chief Economist Daryl Fairweather said.