Average mortgage debt has increased by 14% over the past 5 years


Average mortgage debt has increased by 14% over the past 5 years

A worried young couple reviews their finances while reviewing a plan for their home.

the average mortgage debt held by US homeowners rose 14%, according to data from Experian. At the end of 2021, the average mortgage balance was $223,952 in the United States, compared to an average of $196,403 for the same period in 2017.

Average homeowner mortgage debt in states such as Washington, Texas and Tennessee has increased the most, rising more than 20%. This period of soaring prices took place against a backdrop of unprecedented social and financial upheaval: the onset of the COVID-19 pandemic, historically low interest rates in 2020 and the ensuing real estate market frenzy, among others. The country has also seen more city dwellers move to suburban areas in search of more space and lower prices. At the start of 2021, 82% of urban areas had fewer people entering than leaving, according to Bloomberg.

Keeping housing expenditures at 30% or less of income is a widely accepted measure used by researchers and economists to measure the affordability – or financial burden – of housing in the United States. the suggested 30% threshold in some of the most expensive metropolitan areas in the United States

Experian looked at how mortgage debt varies by state and how it has increased over time. This analysis includes mortgage holders who owned only one property, as well as those who had invested in one or more properties that they themselves did not inhabit. Data is representative of total mortgage debt per person and includes residential property owners only.

The states reporting the highest and lowest average mortgage debt follow relatively closely the affordability of housing in the United States. No US state has seen its average mortgage debt fall in the last five years analyzed by Experian.


Median home prices rose sharply in 2020

The sale price of the typical American home took off in the summer of 2020 after many US states began easing lockdown restrictions put in place to stem the spread of COVID-19. The housing industry was particularly hot in less densely populated states that saw an increase in remote workers who were no longer required to live close to their offices.

The growth rate of house prices declined slightly at the start of 2022. Now, as the Federal Reserve raises interest rates, the market is experiencing a slowdown. House prices are expected to continue to rise, but much more slowly than during the 2020-2022 period.


National mortgage debt has increased over time

The average American had over $220,000 in mortgage debt at the end of 2021.

Mortgage debt has been steadily increasing since 2017, with the exception of early 2020, when mortgage debt declined slightly on average. In March 2020, Congress passed the CARES Act that allowed some homeowners to suspend or reduce their mortgage payments after the pandemic began.


Mortgage balances have increased across the country

Mortgage debt has grown fastest over the past five years in Idaho, Utah, Tennessee, Colorado and Texas. Homeowners in the Northeast and Illinois saw the slowest rate of increase.

While mortgage debt was high on average in Hawaii, it grew much more slowly than in other parts of the United States. Aloha State has seen nearly 12% growth in mortgage debt since 2017. Some states historically considered very affordable, such as Texas, are increasing mortgage debt.


California and Washington lead the continental United States in mortgage debt

The Western, Pacific Northwest and Northeastern states hold the largest amount of mortgage debt on average, according to Experian mortgage data as of the end of 2021.

California and Washington led the continental United States in states with the highest average mortgage debt, while West Virginia and Mississippi had the lowest. Hawaii’s average of over $371,000 makes it the second highest state for overall mortgage debt.

This story originally appeared on Experian and was produced and
distributed in partnership with Stacker Studio.

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