The average loan amount for a home mortgage in the U.S. is down markedly from the high in mid-March, indicating that the housing market is cooling as interest rates rise.
The Mortgage Bankers Association's latest Weekly Mortgage Applications Survey released Wednesday shows the average loan size was at $422,100 for the week ending June 17. That's up slightly from $419,000 the week before, but down significantly from the $460,100 record for the survey ending March 18.
"The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price-growth is moderating," said Joel Kan, MBA's associate vice president of economic and industry forecasting.
"Purchase applications increased for the second straight week – driven mainly by conventional applications – and the [adjustable rate mortgage] share of applications jumped back to over 10 percent," Kan said. "However, purchase activity was still 10 percent lower than a year ago, as inventory shortages and higher mortgage rates are dampening demand."
"Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98 percent – the highest since November 2008 and the largest single-week increase since 2009," Kan explained.
He added, "All other loan types also increased by at least 20 basis points, influenced by the Federal Reserve’s 75-basis-point rate hike and commentary that more are coming to slow inflation."
Kan noted, "Mortgage rates are now almost double what they were a year ago, leading to a 77 percent drop in refinance volume over the past 12 months."