Average Loan Sizes Reach Record Highs, Posing a Challenge for Entry-Level Buyers
During the week ending February 4th, The Mortgage Bankers Association (MBA) reported record high average loan sizes reaching $446,000 after consecutive gains over the past month. The 30-year fixed-rate mortgage averaged 3.7% at the start of February, compared with 3.4% the previous month, giving borrowers little incentive to refinance. Loan size appreciation is partially attributed to slower growth in government purchase activity with a 12% year-over-year drop in the Purchasing Index, NAHB’s Eye on Housing reports.
The Mortgage Bankers Association’s (MBA) latest weekly application surveys show average loan sizes reaching consecutive record highs each week for the latest month, with a record high of $446,000 for the week ending February 4. Accompanying the increase was a similar dramatic rise in the 30-year fixed-rate mortgage rates, reaching 3.83 percent in the latest week. These factors are obstacles for entry-level homebuyers.
On an unadjusted basis, the Purchasing Index in the latest week was 12 percent lower than what it was one year ago (year-over-year percent change for the same week) and its refinancing counterpart was 52 percent lower.