MBA Chart of the Week: Purchase/Refinance Applications–Average Loan Amount
According to data from the Mortgage Bankers Association’s Weekly Applications Survey (https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/weekly-applications-survey), the average loan balance on home purchase applications in August 2016 was $296,600, a 38 percent increase compared to the same month five years prior.
Looking back at the past decade, purchase loan balances were declining slightly from 2006 to 2011, but since 2012, there has been a steep increase in purchase loan balances as the growth in purchase applications was skewed toward larger loan sizes. Fewer entry-level and first-time home buyers, increasing availability of jumbo mortgage credit and tight inventory for lower priced homes are a few of the factors driving that trend.
We expect that household formation and housing demand will continue to be strong, led by a gradual return of first-time home buyers, which should boost growth in the lower loan balance segments of the purchase market and lower the overall purchase average.
On the refinance side of the market, the average loan balance on a refinance application in August 2016 was $269,400, 15 percent higher than in August 2011. As rates went below 4 percent in 2013, we saw a wave of refinancing across the spectrum in terms of loan size; but since then refinancing volume has been driven by higher loan balance jumbo borrowers. The average loan amount for refinance loans has not only been increasing, but has been quite volatile, fluctuating with rate movements.
To view the Chart of the Week, click https://www.mba.org/news-research-and-resources/forecasts-data-and-reports/forecasts-and-commentary/chart-of-the-week.
(Lynn Fisher is vice president of research and economics with the Mortgage Bankers Association; she can be reached at lfisher@mba.org. Joel Kan associate vice president of economic forecasting with MBA; he can be reached at jkan@mortgagebankers.org.)
