Yet, for many an American, the dream of owning a home can seem pretty far fetched. In the past, people were able to save up enough money to buy properties outright. Due to rising property prices and years of economic uncertainty, it’s only really possible with the help of a mortgage — hence why staying informed on the latest mortgage statistics can help provide a better understanding of today’s market.
In a nutshell, mortgages are huge loans that take a long time to pay off before a property truly belongs to its owner. For prospective homeowners, mortgages are still an area of uncertainty with the aftermath of the 2008 financial crisis affecting both borrowers and lenders. It’s been difficult for the housing market recently, but things are looking up.
So, take a look at these eye-opening mortgage stats and learn more about the current state of mortgages in the US!
Most Fascinating Mortgage Stats and Facts — Editor’s Pick
- As much as 6 million homes are sold in the US on a yearly basis.
- Nearly 40% of all American homes are completely mortgage-free.
- Washington DC has the highest average mortgage debt of all US states.
- $15.8 trillion is the total amount of mortgage debt in the US.
- The majority of unmarried homeowners are, in fact, women.
Mortgage Statistics and COVID-19 in 2020
The mortgage statistics for 2020 show that the COVID-19 crisis had a much more muted impact on real estate prices than the popping of the prior housing bubble as the actions of politicians and central bankers to counteract the crisis were much more radical and fast.
There may be other specific reasons as to why house prices went up. Buyers desire houses that have a bit more space or even a garden. Now many people can afford to buy expensive homes since they saved money while working from home. Still, there is a bigger game at play.
In Washington, the Federal Reserve has introduced a quantitative easing (QE) program, where central banks can buy financial assets in cash. This newly created money will cause the inflation rate to remain low and result in a smaller financial meltdown than prior bubbles did.
Fannie Mae believes that in 2020 mortgage lending would be higher than ever. They projected $54.1 trillion in total loan volume, with around $2.7 trillion of that being refinance volume.
The world’s largest mortgage provider, Fannie Mae, said that mortgage lending is going to reach an all-time high. At the interest rate being offered, they also estimated that the sales of new houses would reach 777,000 in 2020, which is a 14% gain from 2019.
On the other hand, sales of new homes would total 5.3 million, which is down by 0.4% since 2020.
Key Figures
- Macroeconomics
| Monthly annual inflation rate in the US | 1.4% |
| US unemployment rate | 3.86% |
| S&P/Case Shiller US National Home Price Index | 212.59 |
- Housing Market
| Number of housing start-ups in the US | 1.4 million |
| Total home sales in the US | 6 million |
| Existing home sales in the US | 5.34 million |
- Credit Conditions
| Residential mortgage-backed security issuance in the US | $63.7 billion |
| 10-year treasury constant maturity rate in the US | 3% |
| Share of non-prime originations which were mortgage loans in the US | 17% |
- US Mortgage Data
| Value of mortgage debt In The US | $16.01 trillion |
| US interest rate on conventional 30-year fixed-rate mortgages | 3.94% |
| US interest rate on conventional 15-year fixed-rate mortgages | 3.19% |
US Mortgage Market Statistics for 2020
Costs rose in the third quarter of 2020 over a cost of $6,566 in the second quarter of 2020 due to increased spending on hiring personnel to service unusually high demand caused by record-low mortgage rates.
The housing market had defied expectations in nearly every area of the industry. However, nobody benefited from this boom. First-time homebuyers faced very expensive home prices, which made it very difficult to break into the housing market, despite the low mortgage rates.
The Mortgage Bankers Association records quarterly data on how much independent mortgage companies and home-loan subsidiaries of chartered banks make on loans.
The federal reserve had kept a lid on rates by implementing an aggressive monetary policy earlier in the COVID-19 pandemic. Without this financing strategy of buying bonds, mortgage rates would have skyrocketed.
Also, higher mortgage rates could have diluted the mortgage market, which would have slowed down home price growth alongside making refinancing a lot less profitable for homeowners and borrowing expensive for buyers.
The average loan size of $282,660 equated to a profit of $5,535 per loan. This performance was significantly above the same quarter in the year prior, when lenders earned $1,924 of net income on each loan.
Sharp gains in the prices of homes and the slight increase in interest rates combined together to weaken mortgage demands. According to the Mortgage Bankers Association, the total mortgage application volume had fallen by 4.1% towards the end of 2020.
At the same time, homebuyers started seeing an increase in prices that was the fastest-growing rate observed in 6 years.
Mortgage Statistics — Interesting Trivia
Before getting into the nitty-gritty of mortgages, there’s a lot of fun trivia about mortgages you ought to know. We’ve compiled the most interesting ones in the following stats.
The word “mortgage” actually comes from the word “dead”
(Lexico)
That’s right, the word mortgage stems from the Old French words “mort” and “gage,” the literal translation being “dead pledge.” The reason for this was that your debt effectively becomes “dead” once it’s paid off, so, in that sense, there’s nothing really morbid about it at all!
Mortgages used to be merely short-term solutions
(Penn Libraries)
According to historical sources, the first residential mortgage loans were generally considered to be just short-term agreements. A higher down payment was required, and interest rates were usually renewed annually. Today, mortgages are more long-term, with a 30-year mortgage being the most common form.
A red door equals a paid-off mortgage
(Apartment Therapy)
In Scotland, many people paint their doors red as a sign that the mortgage had been successfully paid off.
Mortgage trends greatly differ from country to country
(Penn Libraries)
In the UK, for example, mortgages are almost a necessity to own a home, with the government providing various schemes to help buyers purchase their first home. In France, however, mortgages are rarer, and there are a lot of renters in the country.
Mortgage Statistics in the US
As the basic principles behind mortgages are fairly similar all over the world, we found stats that give a much better idea of mortgages back home.
3.99% is the average interest rate on a 30-year mortgage
(Value Penguin)
Data shows that they vary between 3.13–7.84%. Those with shorter-term mortgages can benefit from lower interest rates as their loans are lower-risk and can be paid off a lot quicker.
One-third of Americans are completely clueless about mortgages
(CNN Money)
Mortgages are confusing. A third of the US population doesn’t understand how much of a downpayment is required to get a mortgage, numerous mortgage advisor agencies claim, whereas another 30% aren’t sure what the “Annual Percentage Rate” (APR) means.
This could potentially lead to long-term consequences, such as choosing an interest rate that’s too high, as well as putting off buying until they’ve saved a much higher deposit than they actually need.
$231,700 is the median home value in the US
(Zillow)
If you live in a coastal state, like California, you can expect the value of your home to be considerably higher. In Southern and Midwestern states, such as Ohio and Iowa, you can expect the value of your home to be somewhat lower.
According to the US Census, the total percentage of homeowners mortgage in the US is 64.8%
(Census.gov)
Most buyers need a mortgage to buy a home due to increasing property prices and a sudden change in circumstances. Likewise, people want to own their homes sooner, making a mortgage a perfect solution.
Over 55% of those who took out a mortgage in 2018 did so with a downpayment of less than 6%
(Smart Asset)
The percentage is even higher for first-time buyers, with 72% putting down less than 6%. This is much lower than the recommended 20%.
$1,030 is the average monthly mortgage payment in the US
(The Balance)
The average payment is higher for those with 15-year mortgages, averaging at $1,505 a month, mortgage statistics from 2019 reveal. The recommended mortgage payment is around 28% of your monthly salary.
Over 6 million homes are sold in the US annually
(Statista)
5.96 million homes were sold in 2018, with the figure expected to rise past 6 million this year. With the number of home sales increasing, it could be a good time to consider putting yours on the market too.
Nearly 40% of all American homes are completely mortgage-free
(Forbes)
According to mortgage lending statistics from Zillow, 37% of American households are currently mortgage-free.
A less than perfect credit score will make it difficult to get a mortgage
(Forbes)
Mortgage application statistics show that 32% of applicants with “less than perfect” credit scores were denied a mortgage. Meaning it’s more difficult to get a mortgage unless you have a high credit score.
Reverse mortgages are popular with senior homeowners
(Statista)
Reverse mortgages are reserved for homeowners aged 62 or over, allowing a senior to borrow money against the value of their home, with no repayments as the money is recovered either when the property is sold or the owner dies. The largest providers of reverse mortgages are Wells Fargo, accounting for 162,889 HECM originations.
Mortgage Debt Statistics in the US
These statistics provide an overview of the amount of mortgage debt incurred by homeowners in the US.
$202,284 is the average mortgage debt in the US
(Experian)
The average house price sale has increased over 46% in the last decade, while the average household income has only increased 3% within the same period, leading to a higher level of mortgage debt amongst homeowners.
Washington DC has the highest average mortgage debt of all US states
(Experian)
Washington DC has the highest average mortgage debt, averaging $416,848 per borrower. The second-highest belongs to residents of California, followed by Hawaii, Washington, and Colorado.
$15.8 trillion is the combined total for all mortgage debt (outstanding, in particular) in the US
(Federal Reserve)
One-to-four family residences make up more than $11 trillion. Although this might seem like a negative trend, it is actually a sign that the housing market is in recovery following an extremely turbulent period.
Meanwhile, the number of non-mortgage consumer debt has hit more than $4 trillion in the US
(CNN News)
Excess spending during the holiday period and growing student loans are partly to blame for the increase.
Delinquency rates have been steadily decreasing in the US
(Experian)
The number of late mortgage payments of 30–59 days has decreased by 61% since 2009. These are yet another sign that people’s financial situations are improving following the recession.
Mortgage Market Data — Demographics
The demographics concerning homeownership in the US provide a more detailed picture of homeownership, showing exactly who is buying properties in the US.
Older generations make up the largest proportion of homeowners
(NAWRB)
The highest rate of homeownership is 78% among those aged 65 and older. Among Millennials, the rate is more around 36.5%, although this has increased recently. The remaining rates are 60% for those aged 35–44, 70.6% for the 45–54 age group, and 75.1% for 55–64-year-olds.
Homeowner rates vary greatly across the US
(NAWRB)
The Federal National Mortgage Association — commonly referred to as Fannie Mae — and The US Census Bureau report the following current ownership rates for each region:
The majority of unmarried homeowners are, in fact, women
(Prosperity Now Scorecard)
Since 1986, the overall number of female homeowners has surpassed the number of male homeowners, with the homeownership rate for single female-headed households sitting at 49% compared to 47.7% of single male-headed households.
The ideal DTI ratio for a mortgage is said to be 36%
(Nerd Wallet)
Using a debt-to-income ratio, mortgage affordability can be more easily determined. Alas, there is also the question of affording monthly payments in addition to all the other expenses. So, make sure you can afford all the payments before you commit to your mortgage!
The racial homeownership gap and the racial wealth gap are linked
(The Balance)
The racial homeownership gap has an impact on the overall racial wealth gap. With homeownership having such a significant impact on wealth, closing the gap could be the solution to closing the racial wealth gap as well.
Mortgage Rates Today
The current mortgage rates for some of the US’s top lenders include:
(Bankrate)
Wells Fargo:
| Product Type | Interest Rate | APR |
| 30 Year Fixed Rate | 3.750% | 3.865% |
| 15 Year Fixed Rate | 3.000% | 3.202% |
| 5/1 ARM | 3.125% | 3.972% |
Bank of America:
| Product Type | Interest Rate | APR |
| 30 Year Fixed Rate | 3.750% | 3.892% |
| 15 Year Fixed Rate | 3.000% | 3.241% |
| 5/1 ARM | 2.875% | 3.931% |
Quicken Loans:
| Product Type | Interest Rate | APR |
| 30 Year Fixed Rate | 3.990% | 4.247% |
| 15 Year Fixed Rate | 3.500% | 3.948% |
| 5/1 ARM | 3.500% | 4.406% |
Chase Loans:
| Product Type | Interest Rate | APR |
| 30 Year Fixed Rate | 3.750% | 3.817% |
| 15 Year Fixed Rate | 3.000% | 3.146% |
| 5/1 ARM | 2.990% | 3.875% |
There are numerous mortgage rates refinance options, varying between a fixed rate of 3–4%
(FRED Economic Data)
With such a fluctuation between rates, it’s important to shop around to find the best rate possible.
Overall, rates depend on a number of factors, including economic growth, inflation, the housing market, as well as Federal Reserve regulations.
Mortgage Rates Trends
Mortgages have experienced a number of developments over the past year, including decreasing rates and a higher number of first-time buyers. Looking ahead to the coming year, expected mortgage trends for 2020 include the following:
In 2020, there will be a shortage of houses to buy
(Realtor)
Buyers have already found it increasingly difficult to find houses to buy, a negative trend that looks to continue in 2020. The Realtor 2020 forecast says that a combination of a lack of starter homes being built and a steady decline in sellers is to blame.
Mortgage rates are expected to stay low
(Mortgage Bankers Association)
According to recent mortgage statistics, mortgage rates for 2020 are expected to stay low, following the trend of Q4 of 2019. With no major shake-ups expected for the economy, it could prove to be a good year for house buyers.
A shortage of homes could lead to bidding wars
(Redfin)
Bidding wars have been relatively uncommon in recent years, with fewer people buying properties following the recession. Nevertheless, as the number of buyers increases, it is likely that the bidding war culture renews as buyers battle it out for fewer available homes.
The good news is — homes will continue to be built
(National Association of Homebuilders)
Many mortgage brokers claim that the year 2019 ended on a positive note, in regards to the number of homes being built; the NAHB’s monthly confidence index climbed from 71 to 76 in just one month. Reduced mortgage rates and rising demand gave housebuilders the confidence to continue construction — a development that is set to continue next year.
Although many mortgage trends point towards an even better 2020, they cannot be taken as gospel. At the beginning of 2019, interest rates were expected to rise, with the drop in rates being unprecedented a year ago.
Bottom Line
Mortgages are a complex aspect of finance and are impacted by several events happening across the US, as well as globally. While the last recession made a significant dent in the housing market, things are looking up with more homeowners and more first-time buyers among Millennials. Understanding the latest mortgage statistics provides valuable insights into the state of the housing market, as well as the US economy in general.
