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Last updated on March 20th, 2023 at 09:54 pm
According to estimates by the Mortgage Bankers Association, in the year 2021, $1.61 trillion was issued for purchase loans by mortgage lenders. In 2020 the figure was $1.48 trillion.
The mortgage boom led to a hike in prices during last year. The historically low-interest rates and work from home resulted in many Americans looking for bigger homes.
During the pandemic, many Americans also got raised and built up their savings to buy a new home.
In recent months even though the rate of home-price growth has slowed it remained near record levels.
With the labor market getting stronger and increase in pay across many industries many potential home buyers are hitting the housing market.
According to the Bureau of Labor Statistics, in the third quarter wages for all private-sector workers grew 4.6% year over year.
The decline in refinances was partly offset by the growth in purchase mortgages which fell from $2.6 trillion in 2020 to $2.3 trillion in 2021. Total originations also fell from $4.1 trillion in 2020 to $3.9 trillion in 2021.
In 2022, the Federal Reserve is expected to raise rates three times, which would push up mortgage rates higher.
About 59% of the mortgages issued last year were refinanced. By 2023 the refinance share is expected to drop to 27%, and in 2022 the volumes are expected to drop to 63%.
According to the Federal Reserve Bank of Atlanta, mortgages are less affordable compared to income, they estimated that Americans needed 29% of their income to cover a mortgage payment on a median-priced home in early 2021 which in October rose to 33%.
Reference Source: The Hamden Journal
