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The average dollar amount of a mortgage purchase application hit a record of $418,500 as higher home prices force buyers to borrow more, the Mortgage Bankers Association reported this week.
“The continued rise in purchase loan application sizes is driven by high home price appreciation and the lack of housing inventory on the market—especially for entry-level homes,” says Joel Kan, vice president of economic and industry forecasters for the MBA. “The slower growth in government purchase activity [like in VA or FHA loans] is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range.”
Home prices have been rising rapidly over the past year by double-digit percentages. The median existing-home price for all housing types in December was $358,000, up 15.8% compared to a year earlier ($309,200). Last month, every major region of the U.S. posted price gains, led by the South (up 20% compared to a year ago), according to the National Association of REALTORS®’ latest home sales report.
Down payments have also gotten larger. Buyers in the country’s 50 largest metros brought an average $46,283 to closing, according to a new study from LendingTree. View a breakdown of average down payments.