Loan Sizes Outpace Home Prices Says MBA

New York, NY, March 23, 2015— The increase in average loan sizes for purchase mortgage applications has outpaced the recovery in house prices, according to the Mortgage Banker’s Association. This unusual occurrence seems to confirm continued weakness at the lower end of the housing market.

MBA’s Weekly Application Survey for the week ending March 6, 2015 reported that the average purchase loan size had grown to a record high of $294,900. For comparison, the average purchase loan size was about $50,000 lower in the final months of 2007, just prior to the recession, when house prices were at a similar level.

Consistent with this explanation of high average purchase loan sizes, MBA’s Mortgage Credit Availability Index shows that for the last year the availability of mortgage credit has been increasing more rapidly for jumbo loans (loans greater than $417,000) than for conforming loans.