Typical Mortgage Taken Out by Americans in Recent Years Have Been the Largest on Record

The continuous increase of home prices in the past few years was mainly caused by an unbalanced housing market. There was just too many people looking to buy a home but not enough homes available to keep up with the demand. As a result, Americans are taking out the largest mortgages on whatever homes they can find.

A recent analysis of data conducted by the Mortgage Bankers Association confirmed this trend, as survey data reveals that spending on homes in 2016 and early 2017 have been the highest on record since 1990.

Higher prices have a few different effects on the market. Buyers have to make tradeoffs on the kinds of homes they can afford, or may be shut out of ownership altogether.

They may also adjust their borrowing. Larger mortgage sizes may reflect not just more expensive properties, but also more leveraged ones.

The 20% down payment is a relic: the median down payment in 2016 was 10%. For first-time buyers, it was 6%. First-timers and other buyers of less-expensive homes are more leveraged now than they were at the height of the housing bubble a decade ago.

Home loan sizes aren’t the only things that have changed in the years since MBA started its survey. Back at the start of the survey, the median mortgage size was only about 3.3 times the median annual income. It’s now over five times as big – though buyers get bigger homes and lower interest rates.

Here’s a look at some housing market characteristics for select years.

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