Red-Hot Housing Market Fuels Mortgage Borrowing Record


The Mortgage Bankers Association reported This Week in Real Estate that mortgage lenders issued a record $1.61 trillion in purchase loans in 2021. As the economy and market transition into the new year mortgage rates remained low to end 2021. However, analysts predict multiple mortgage rate increases throughout 2022. Below are a few newsworthy events from the final week of 2021 that influence our business: 

Red-Hot Housing Market Fuels Mortgage Borrowing Record. Americans borrowed more than ever to buy homes in 2021. Mortgage lenders issued $1.61 trillion in purchase loans in 2021, according to estimates by the Mortgage Bankers Association. That is up slightly from $1.48 trillion in 2020 and above the previous record of $1.51 trillion in 2005. The mortgage boom reflects a thriving housing market and the corresponding run-up in prices over the past year. Many of the forces that pushed Americans into the housing market in the early months of the pandemic – low interest rates and a desire for bigger homes – continue to drive up prices and mortgage balances. 

Year-End Mortgage Rates At 3.11%. Mortgage rates stayed low for the final week of 2021, but housing analysts largely predict rates will be heading up in the coming weeks. “Mortgage rates have been effectively been moving sideways despite the increase in new COVID cases,” says Sam Khater, Freddie Mac’s chief economist. “This is because incoming economic data suggests that the economy remains on firm ground, particularly cyclical industries like manufacturing and housing. Moreover, low interest rates and high asset valuations continue to drive consumer spending. While we do expect rates to rise, the push the first-time home buyer demographic that’s been propelling the purchase market will continue in 2022 and beyond.

Expert Insights On The 2022 Housing Market. As we move into 2022, both buyers and sellers are wondering, what’s next? For the answer to those questions and more, we turn to the experts. Here’s a look at what they say we can expect in 2022. “Consensus forecasts put rates at about 3.7% by the end of next year. So, that’s still historically low, but certainly higher than they are today,” says Odeta Kushi, Deputy Chief Economist, First American. Lawrence Yun, Chief Economist, National Association of Realtors, believes “with more housing inventory to hit the market, the intense multiple offers will start to ease. Home prices will continue to rise but at a  slower pace.” “Strong demographic demand will continue to act as the wind in the housing market’s sails,” according to Mark Fleming, Chief Economist, First American.

Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate and Berkshire Hathaway HomeServices Real Estate Professionals are eligible to receive no-obligation home warranty coverage from American Home Shield or 2-10 Home Warranty the first six months the home is listed with our company?