Why should homebuyers be aware of the latest mortgage statistics and trends? Because purchasing a home is one of the largest investments a person can make, and consequently, a mortgage is the biggest financial responsibility that comes with homeownership. Hopefully, this article will provide you with some insight into the complex and intricate US home-financing market by providing the most important details on mortgage rates, types, and lenders.
After all, making a smart and well-informed decision on your mortgage can save you thousands of dollars and a lot of headaches and stress when it comes to making future mortgage payments.
Here’s all you need to know:
Top 10 Key Mortgage Facts and Stats to Remember
- Mortgage debt is the biggest form of debt among adult US consumers.
- Around 37% of households in the US are mortgage-free.
- The average mortgage payment is a little over $1,500 a month.
- Mortgage rates will continue to drop, according to predictions.
- The 30-year FRM is the most common mortgage loan.
- 85% of first-time homebuyers have a mortgage as opposed to 69% of repeat buyers, the 2018 report on mortgage stats reveals.
- Credit score plays a determining role in a borrower’s ability to get a mortgage.
- Hispanic and black borrowers are more likely to be denied a conventional mortgage.
- At the end of 2018, millennials accounted for 45% of all new mortgage loans.
- The market share of commercial banks in residential mortgage lending declined from 74% to 52% from 2007 to 2014.
Mortgage Debt Statistics
1. Mortgage debt is the biggest form of debt among adult US consumers.
Total outstanding mortgage debt in the US amounted to a whopping $16 trillion in 2019 with one-to-four-family residence homes accounting for the lion’s share of this debt at $11.17 trillion.
2. Mortgage debt on nonfarm and nonresidential property has been fluctuating through the years.
(St. Louis Fed) (Statista) (Statista)
Mortgage debt on nonfarm and nonresidential property reached about $2.99 trillion, mortgage statistics for Q3 2019 indicate, whereas the total outstanding mortgage debt on farms, even though sitting low at $256.6 billion, has been steadily increasing since 2004.
Outstanding debt on multifamily residences, which amounted to around $1.6 trillion in 2019, has also been rising since 2001.
3. The average mortgage payment is a little over $1,500 a month.
(The Mortgage Reports)
This is the average estimation of the US Census Bureau, but mortgage rates depend on factors such as credit score, down payments, and debt-to-income ratio (to name but a few). The best and easiest way to determine a monthly mortgage payment — use an online mortgage calculator.
4. Around 37% of households in the US are mortgage-free.
(The Real Deal)
How many homes in the US are owned? The number of homeowners paying off their mortgages has gone up by 5.5 percentage points in the last 10 years. This is mostly because younger people, burdened by student debt and high living costs, wait longer to purchase a new home.
5. West Virginia had the highest rates of fully-paid mortgages (54%), 2017 mortgage statistics show.
(The Real Deal)
Maryland and Washington were on the other end of the spectrum (where 27% and 24% of homeowners have paid off their mortgages, respectively).
Mortgage Market Statistics
6. Mortgage rates dropped all through 2019.
The annual average mortgage rates in the US were 3.9% in 2019, down from 4.5% recorded in 2018.
7. Mortgage rates will continue to drop, mortgage statistics for 2020 predict.
(Freddie Mac) (HousingWire) (The Mortgage Reports)
The spread of the COVID-19 pandemic threatens to lower mortgage rates even further. Analysts estimate that average annual rates for 2020 could be as low as 3.6%.
If these forecasts are accurate, mortgage rates this year will be the lowest recorded since 1973 — lower than in 2016 when the annual average dropped to 3.65%. Nevertheless, the US economy is in uncharted territories at the moment, and mortgage rates could bounce back just as quickly come June.
For now, current mortgage rates (as of April 2020) for a 30-year FRM were 3.33%, whereas the 15-year FRM was estimated at 2.77%.
8. House prices continue to rise.
Home prices increased by 5% from Q2 2018 to the second quarter of 2019. In fact, as of Q2 2019, house prices have been rising for 32 consecutive quarters. A shortage of homes on the market has caused prices on the market to skyrocket.
In addition, low home mortgage rates (FRMs fell by nearly one percentage point from November 2018 and May 2019) also drive house prices.
9. Delinquency and foreclosure rates are down.
(CoreLogic) (ATTOM Data Solutions)
On the plus side, delinquency rates dropped by 0.4% in December 2019 compared to December 2018.
What’s more, the number of foreclosed properties in February 2020 was the lowest on record since 2005 with 1 in every 2,841 housing units, or a total of 48,004 US homes, with foreclosure filings.
Mortgage Statistics on Different Mortgage Types
10. The 30-year FRM is the most common mortgage loan.
The average mortgage length is 30 years, although some borrowers might opt for a shorter (15-year FRM) or a longer mortgage — 40 years.
Longer mortgages allow homebuyers to purchase a more expensive home and make lower monthly payments, yet this also means higher interest rates during the life of the loan.
11. Adjustable-rate mortgages (ARMs) peaked in 2018.
(The Washington Post)
ARMs, interest in which dropped after the recession and housing crisis, are becoming popular again. Judging by U.S. mortgage market statistics: 2018 saw the biggest increase in ARMs — 9.2% of all new mortgage loans, an increase of 5.6% from December 2017.
On top of that, Ellie Mae reported that the number of mortgage loans with an adjustable rate in December 2018 was the highest since the company started keeping loan records in 2011.
12. The number of both purchasing and refinancing loans was up in Q3 2019.
Purchase loan mortgages originations amounted to $375 billion last year. Refinancing mortgage origination volume in Q3 2019, on the other hand, reached $230 billion.
13. Refinance mortgage loans are on the rise.
Since plummeting in 2013, due to the Federal Reserve increasing the interest rate, the refinance share of mortgage applications went up by 26% in 2020.
As the coronavirus pandemic sweeps the nation, more and more people are becoming insecure about their future and are trying to take advantage of low rates and the unstable mortgage market — one of the main reasons behind the dramatic rise of refinance mortgage loans.
14. According to reverse mortgage statistics, the number of HECMs in 2019 dropped to 31,274 — the lowest it’s been in 16 years.
A reverse mortgage loan, or Home Equity Conversion Mortgage (HECM), refers to mortgages insured by the American government allowing homeowners aged 62+ to take out a loan on their property — usually up to 80% of the value. This loan is repaid only when the borrower moves from the property or passes away.
However, reverse mortgage facts show that in that case, the amount owed is typically much higher than the borrowed amount (due to interest and fees added to the loan).
4 Fast Facts About Qualifying for a Mortgage Loan
15. Credit score plays a determining role in a borrower’s ability to get a mortgage.
Applicants with a credit score of at least 580 can qualify for an FHA loan with a minimum down payment of 3.5%, mortgage data and facts indicate. A lower credit score, statistics show, would require homebuyers to make a downpayment of at least 10%.
Other lenders might have higher criteria, as many of them demand a credit score of 620 or higher for applicants. Beware of things that can damage your credit rating, such as bankruptcy, a high-interest debt, or credit card debt.
16. The share of applicants who were denied a conventional mortgage went down to 9.8%.
Peaking in 2007, when 18.1% of applicants were denied a mortgage loan, the rate of denials continued to go down, dropping to less than 10% in 2016. Looking at historical mortgage loan data, the rate of denials in 2016 was the lowest recorded since at least 1994.
17. Hispanic and black borrowers are more likely to be denied a conventional mortgage.
In 2016, 20.9% of blacks and 15.5% of Hispanic applicants were turned down for a mortgage loan compared to just 8.1% of white and 10.4% of Asian borrowers.
This is not a case of overt racism and mortgage discrimination, statistics reveal, but rather caused by lower-income and credit score. Blacks and Hispanics have worse credit records than whites — according to credit score statistics, 25% of blacks had premium credit scores compared to 65% of whites.
18. Applicants in suburban areas are the most likely to get approved for a mortgage loan.
Only 8.4% of applicants in suburban areas were denied a loan unlike 10% of urban applicants and 11.5% of borrowers from rural areas.
Who’s Paying a Mortgage?
19. 85% of first-time homebuyers have a mortgage as opposed to 69% of repeat buyers, 2018 report on mortgage loan statistics reveals.
First-time homebuyers are faced with many a challenge and qualifying for a mortgage loan is but one of them. First-timers are more likely to get denied a loan, which would explain why 54% of them would contact more than one lender (unlike 37% of repeat buyers who do so).
20. At the end of 2018, millennials accounted for 45% of all new mortgage loans.
Since 2017, Gen Y has made up the largest share of mortgage loans. If we look at how many mortgages were originated in 2018, we can clearly see that millennials make up the largest share, followed by Generation X and boomers who accounted for 36% and 17% of all new mortgages, respectively.
Who Are the Largest Mortgage Lenders?
21. The market share of commercial banks in residential mortgage lending declined from 74% to 52% from 2007 to 2014.
In the past decade, FinTech lenders, or companies that offer application processes that can be entirely completed online, have turned into an important source for mortgage loans, US mortgage statistics reveal. Especially now that the market share of banks has also declined.
22. 80% of applicants are looking for refinancing from FinTech lenders as opposed to 48% of those who seek this option from traditional lenders.
(The Terner Center) (Shelving Rock) (New York Fed)
FinTech lenders are more efficient, and they underwrite a high percentage of FHA-insured loans that serve applicants with lower income or markets that banks can’t enter due to regulation.
This, as mortgage origination statistics show, has led to a steady rise in lending for FinTech companies, climbing from $34 billion of all originations in 2010, or 2% of the market, to $161 billion, (i.e., 8% of the market) just six years later.
23. Quicken Loans was ranked as the number one lending company in the US in 2018, judging by the number of total mortgage loans.
Detroit-based Quicken Loans made up 4.7% of the total mortgage origination volume in 2018. Wells Fargo, another leader on the market, accounted for a larger share of the total origination volume (4.8%).
However, it reported a lower number of approved loans (258,762 vs 375,656).
24. American Advisors Group was the top lender of reverse mortgage loans in October 2019.
With 1,277 loan originations in 2019 and closed 9,687 HECMs in 2018, this company was ranked as the leading reverse mortgage company in the US.
Nevertheless, as of June 2019, Wells Fargo is still the all-time leading HECMs lender despite stopping this service in 2011, facts about reverse mortgage indicate.
25. Fannie Mae provided more than $650 billion in liquidity to fund the housing market in 2019,
(Investopedia) (Mortgage Calculator)
Fannie Mae and Freddie Mac are government-sponsored entities that provide easier access to liquidity to banks and other mortgage lenders, allowing them to underwrite and fund more loans.
Together, Freddie Mac and Fannie Mae own or guarantee nearly half of all the mortgages in the US and play a crucial role in the American housing and mortgage market.
What percentage of homeowners have a mortgage?
(Mortgage Calculator) (Mortgage Calculator)
Around 88% of homeowners took out a mortgage to purchase their home in 2016. The majority of borrowers (90%) committed to making mortgage loan payments for 30 years, whereas only 6% and 2% of borrowers that were buying a home opted for a 15-year FRM and an adjustable-rate mortgage, respectively.
How many mortgages are there in the US?
In September 2019, home mortgages accounted for $9.44 trillion of the total debt of American consumers, which reached a total of $13.95 trillion. Just for comparison, the second-biggest component was student loan debt amounting to $1.5 trillion, which is almost $8 trillion lower.
How many mortgages are originated each year?
(The Consumer Financial Protection Bureau)
In October 2018, the number of US home mortgage loan originations reached 543,608 million with estimates projecting a much higher number both for purchase and refinancing loans as a result of low-interest rates on mortgage loans.
Historically low-interest rates might tempt buyers into taking out a mortgage loan. However, experts advise against it — especially as we still aren’t fully aware of the far-reaching consequences the coronavirus outbreak will have on home purchasing and mortgage statistics and demographics, the market, and the economy in general.
Potential borrowers would do well to remember that the mortgage market has always been volatile and that they shouldn’t get carried away by low rates. It might be a good idea to get some professional advice from an accountant before taking out a mortgage loan, or even better, to leave major life decisions until the crisis is over and the market is somewhat stabilized.
- ATTOM Data Solutions
- Freddie Mac
- Mortgage Calculator
- Mortgage Calculator
- New York Fed
- PR Newswire
- Shelving Rock
- St. Louis Fed
- The Consumer Financial Protection Bureau
- The Mortgage Reports
- The Mortgage Reports
- The Real Deal
- The Terner Center
- The Washington Post