15+ Mortgage Statistics Every Home Buyer Must Know in 2020

The majority of Americans can’t buy homes on a whim.

For most people, the first step towards buying a house is:

Getting approved for a mortgage.

Mortgage statistics will give you a general idea of:

  • what you are getting yourself into.
  • what you need to be concerned with are median house prices.
  • the average loan amount offered by lenders,
  • the importance of your credit score and your debt to income ratio.
  • the money you need to set aside for a down payment.

Now:

Let’s get a fresh look at some mortgage industry stats:

US Mortgage Facts and Stats (Editor’s Pick):

  • The median mortgage payment is $1,513.
  • The average rate for a 30-year fixed mortgage is 3.99%.
  • Homeowners in West Virginia owe an average of $110,158.
  • The average debt for mortgages in California is $363,537.
  • 17% of buyers were rejected for a mortgage due to their debt to income ratio.
  • 90% of all buyers have a fixed-rate mortgage loan.
  • Almost 40% of Americans own their homes free and clear.

There are a lot of obstacles standing between you and your forever house, however. Every financial mistake you have ever made will come back to haunt you while you are waiting for your loan approval.

General Mortgage Statistics

Let’s check out some general stats regarding the average mortgage costs.

1. The total US mortgage debt reached $9.4 trillion in 2019.

(Source: Federal Reserve Bank of New York)

According to the Quarterly Report on Household Debt and Credit issues, the current household debt increased to $13.95 trillion. The mortgage balances are the largest component of the amount and they have now reached a staggering $9.4 trillion. To put things into perspective, the outstanding mortgage debt is higher now compared to 2008, when the housing market crashed.

However, the rate of mortgage delinquencies decreased to 0.9%, compared to the previous rate of 1%. This means that there were fewer borrowers that didn’t manage to make the required payments. Foreclosures are also at a low level.

2. The median mortgage payment is $1,513.

(Source: Census)

According to the 2017 American Community Survey done by the U.S. Census Bureau, the median mortgage payment is $1,513 per month. The year before, in 2016, the US mortgage costs equaled $1,486.

Now let’s compare the current median housing costs with those in 2008. Back then, the median was $1,514. The recent mortgage payments are nearly identical to the infamous year for the housing market when the financial crisis happened.

While we are here, let’s explain the difference between the average and the median. The average mortgage payment includes both the highest and the lowest figure. The median, on the other hand, represents the medium figure between the highest and the lowest amount.

3. The average rate for a 30-year fixed mortgage is 3.99%.

(Source: Value Pinguin

There are 2 types of mortgage rates: fixed and variable. Having a mortgage with a fixed rate means that you will be paying the same amount of interest for the whole period. A variable-rate means that the interest can fluctuate. So, when deciding between a variable rate loan and a fixed-rate loan, mortgage rate projections need to be taken into consideration.

Variable-rate loans usually start with a lower interest rate and then adjust depending on the current market. With fixed-rate mortgages, the rate is set depending on the current market. So, the advantage of an adjustable-rate mortgage is that during the first years you will be paying out the mortgage, the rate will be lower than the market rate. Of course, there’s the possibility that the rate will decrease to adjust to the current market. The downside is that the rate can increase significantly. The main advantage of fixed-rate mortgage rates is that even if future mortgage rates increase, you will still be paying the agreed rate. And the obvious downside is that if market rates suddenly decrease you will be paying a higher rate than the average.

According to the latest data, the average rate for a 30-year fixed mortgage is 3.99%, with the rates varying between 3% and 8%. The current average rate of a 15 year fixed mortgage is 3.52%. It varies between 2.50% and 8.50%.

4. The average rate for a 5/1 adjustable mortgage is 3.76%.

(Source: Value Pinguin

Before opting for an adjustable-rate mortgage, it is necessary to look into mortgage predictions. If there is a trend toward lower mortgage rates, then an ARM sounds like a good deal. There are a few types of ARM: a one-year adjustable rate, a five-year adjustable rate or a seven-year adjustable rate.

For example, a 5/1 adjustable rate means that the rate states the same for the first 5 years and gets adjusted for the remaining period. It varies between 2.38% and 7.75%

The lowest mortgage rates ever fell was 3.31% in 2012, when the average was 3.66%. But where are mortgage rates headed? If this trend of lower rates continues, then an adjustable-rate mortgage may be favorable for future homeowners.

5. The average mortgage rate in New York is 4.96%.

(Source: Housing Wire)

Besides the mortgage rate and your credit score, there are a few other things that determine the overall costs. The dreaded down payment. Well, according to mortgage stats, the state of New York has the highest average down payment. New York’s contender for the title of state with the priciest housing is California, where the average down payment is $41,502. Hawaii deserves an honorable mention, seeing how the average down payment required amounts to $39,317.

What makes housing in New York even more unaffordable is the average mortgage rate of 4.96%. May the rates be ever in your favor!

6. Mortgage rates in West Virginia are 4.90%.

(Source: Housing Wire)

The average mortgage amounts are the lowest in West Virginia, equalling $15,369. This fact isn’t exactly surprising seeing how this is one of the poorest states in the USA. Yet, the mortgage rates are far below average. With 4.90%, they come close to the rate of 4.96% in New York.

Mississippi has the second-lowest down payment, averaging $16,297. Though the mortgage rates of 4.90% can be considered higher than average.

The Average Mortgage Loan Amount By State

If you want to know how much Americans owe for their homes, take a look at the stats below:

7. The average debt in Washington, D.C is $416,848.

(Source: Experian)

Washington, D.C has the highest debt on average in 2019. It ranked first in 2018, too. The mortgage loan there is even higher than in California.

According to the latest mortgage statistics, there has been a 1.8% increase in mortgage-related debt in Washington, D.C. When looking at the debt and the median sale prices, the average in 2018 was $410,961. In 2019 the average is $418,555.

The reason why the mortgage debt is the highest in Washington, D.C is a matter of simply and demand. With the height limit on residential buildings and the fact that it is a desirable location, it is no wonder that housing is expensive in Washington, D.C. And let’s not even mention the number of federal government employees living there.

8. The average debt for mortgages in California is $363,537.

(Source: Experian)

Compared to 2018 when the average was $356,892, there has been a 1.9% increase in California. The median sales price is $492,080. Mortgage stats rank California as the second country with the highest mortgages. It is followed by Hawaii, where the average debt is $344,819.

There are also eight metro areas where housing is most expensive. Among them are San Jose-Sunnyvale-Santa Clara, San Francisco-Oakland-Fremont, Santa Barbara-Santa Maria-Goleta, and Los Angeles-Long Beach-Santa Ana.

9. Homeowners in West Virginia owe an average of $110,158.

(Source: Experian)

According to mortgage statistics, the states with the least amount of housing debt are West Virginia, Indiana, Mississippi, Ohio, and Kentucky. The median sales price in West Virginia is $145,200. In Indiana, it is $158,675, with the average debt amounting to $120,354.

The following stats show how mortgages affected home buyers and sellers:

10. 14% of buyers financed the entire purchase with a mortgage.

(Source: National Mortgage Professional

The National Association of Realtors conducts an annual survey regarding the profile of home buyers and sellers. This survey also contains some relevant mortgage stats.

For example, 14% of homebuyers financed 100% of their home purchase with a mortgage. Looking specifically at first-time buyers, the median percent financed with a mortgage was 93%, compared to 84% for repeat buyers.

11. 17% of buyers were rejected for a mortgage due to their debt to income ratio.

(Source: National Mortgage Professional

The debt to income ratio is a deciding factor on whether US mortgage lenders will approve your mortgage application. This basically represents the percentage of your income that goes towards paying off your debts. Applicants with a ratio lower than 40% have higher chances of getting their applications approved.

Out of all home buyers, 17% were rejected due to their debt to income ratio. For first-time homebuyers the share of rejected applicants for the same reason 21%.

12. 13% of mortgage applicants were rejected because they had a low credit score.

(Source: National Mortgage Professional

According to mortgage loan statistics, the second most common reason for getting rejected is having a low credit score. This goes for 15% of first-time buyers and 11% of repeat buyers.

A bad credit score is caused by failure to pay out your credit card bills on time. For lenders, this means that you are a risky borrower. There is a high chance that you won’t be able to pay off the debt, and this, in turn, lowers your chances of getting approved for a loan.

13. 90% of all buyers have a fixed-rate mortgage loan.

(Source: National Mortgage Professional)

It seems that housing mortgage loans with a fixed rate are the most popular among home buyers. The share of both first-time and repeat buyers that have this type of mortgage rates is 90%. The adjustable mortgage rate isn’t the preferred choice for home buyers, with only 2% having this type of mortgage rate.

14. 9% of owners delayed the sale because the home was worth less than the mortgage.

(Source: National Mortgage Professional

When it comes to selling, the main goal is making a profit. Well, in the US the mortgage market is changing fast. What you once paid for your home might not represent the value your home will have when selling.

While the majority of owners were able to sell their homes when they desired so, 9% had to stall. Why? Because the mortgage was worth more than the home.

15. Almost 40% of Americans own their homes free and clear.

(Source: Forbes)

In terms of property ownership, free and clear means that the mortgage has been paid off. And according to mortgage data, 37% of homes were paid off in 2017. The majority of these were owned by older generations.

To be more precise, 41% of the boomer generation owns their homes free and clear. The share of millennials who own their homes free and clear is 15.9%. This is significantly lower than adults older than 70, out of whom 68% have paid off their mortgages.

So if we look at the average mortgage balance by age, it is obvious that older generations owe a smaller amount. The obvious reason is that they had a longer time to pay off the mortgage balance. However, there are a few other factors that need to be taken into consideration. Namely, the amount of student debt that millennials have is significantly higher and it impacts their debt to income ratio.

How Much Mortgage Debt to Americans Have?

Americans have a staggering amount of $14 trillion in household debt. The largest component of that debt? Mortgage balances. In the third quarter of 2019, there were $528 billion added to the housing debt just by mortgages.

But increased housing debt also indicates that the housing industry is recovering from the 2008 crash. Before the crash, most people were able to qualify for a loan, even though most of those loans were sustainable. Nowadays, only people with a high credit score and low debt to income ratio can get approved. And from the latest mortgage statistics, we can conclude that some level of faith has been restored in the industry. Here’s to hoping for even better figures for next year!

Sources:

  1. Federal Reserve Bank of New York
  2. Census
  3. Value Pinguin
  4. Value Pinguin
  5. Housing Wire
  6. Housing Wire
  7. Experian
  8. Experian
  9. Experian
  10. National Mortgage Professional
  11. National Mortgage Professional
  12. National Mortgage Professional
  13. National Mortgage Professional
  14. National Mortgage Professional
  15. Forbes
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