Western U.S. home to highest loan amounts, new report says

Rising home prices and shrinking interest rates helped make 2019 a very good year for originators

Western U.S. home to highest loan amounts, new report says

In its 2019 Purchase Mortgage Loan Amount Snapshot Report, DMS Consumer Finance found that last year, for the second year in a row, average anticipated loan amounts were higher in the West than in any other region of the United States.

Coming in at $342,956, the average anticipated loan amount in the West was 22% higher than the national average of $199,913. The Pacific division (California, Oregon, Washington, Hawaii and Alaska) led the western region with an average of $263,194.

“The continued rise in anticipated home purchase loan amounts in the western region can be attributed to the growth in existing home values in part due to the increased demand as a result of limited housing supply,” the report explained.

Ranking second and third, respectively, were the Northeast region, with an average anticipated purchase loan amount of $208,408, and the South, where it was $187,926, 6% below the national average.

The lowest ranking region, with an average anticipated purchase loan amount of $172,882 was the Midwest. The West North Central area, which includes Iowa, Kansas, Minnesota, Missouri, Nebraska, and both Dakotas, had the lowest average in the country – $166,262 – which was 17% below the national average.

The report also breaks down loan amounts by month, which roughly followed seasonal norms. March saw the lowest average anticipated home purchase amount, $178,441, while June posted the highest with an average of $229,054. Seven months of the year had an average of over $200,000.

The robust buying and selling activity in 2019 was supported by both strong fundamentals and shrinking interest rates. 2019 saw the interest rate on a 30-year fixed mortgage fall from 4.51% to 3.72% by year’s end, drawing many Americans into the housing market shortly before the coronavirus pandemic brought the U.S. economy to a halt.

In its comments about the potential impact of COVID-19 on the housing market, the report pays special attention to New York, California and Washington state, three areas hit especially hard by the coronavirus, where purchase applications during the last week of March 2020 more than 30% lower than the same period in   2019.

“How the purchase mortgage market progresses throughout Q2 and the remainder of the year will depend largely on how long Americans self-isolate,” the report says.