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Rising home prices are prompting more borrowers to take out supersized home loans. Borrowers are taking out the largest mortgages ever on record.
The average purchase loan size reached an all-time high of $453,000, the Mortgage Bankers Association reports. Loan sizes have continuously been hitting new record highs over recent weeks. Home prices are up by double-digit percentages compared to a year ago.
“Prospective buyers still face elevated sales prices in addition to higher mortgage rates,” says Joel Kan, an economist with the Mortgage Bankers Association. “The heavier mix of conventional applications again contributed to another record average loan size at $453,000.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 4.05% last week, MBA reports. Rises in mortgage rates are pushing mortgage applications down. Mortgage applications to buy a home dropped 1% last week compared to the previous week; volume is 7% lower than a year ago, MBA reports.