Homebuyers are facing one of the priciest housing markets in history, and that means they need larger mortgages than ever before. While mortgage demand is falling, due to rising interest rates, the size of the average purchase loan application just set a record.
Mortgage applications to buy a home fell 1% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 7% lower than the same week one year ago.
“Purchase applications saw a modest decline over the week, with government purchase applications accounting for most of the decrease,” said Joel Kan, an MBA economist. “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.”
Home prices have been climbing steadily as demand continues to outstrip the supply of houses for sale. While the increases had moderated at the end of last summer, they are now widening again. Prices nationally were up 18.5% year over year in December, according to the most recent report from CoreLogic.