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Million-Dollar Mortgages: A Growing Trend
Overview
In recent years, the landscape of mortgage balances has shifted significantly. With mortgage rates hovering around 7% and home prices remaining high, more borrowers are taking on mortgages exceeding $1 million. This trend is evident in the increasing number of cities where average mortgage balances surpass the million-dollar mark.
47 Million-Dollar-Mortgage Cities (and a Few $2 Million Cities)
In 2023, there were 26 cities with average mortgage balances over $1 million. By June 2024, this number had nearly doubled to 47 cities. This increase is notable despite home sales and new mortgages still being below pandemic-era levels. Interestingly, 32% of home sales in early 2024 were all-cash transactions, a decade high, even as median home prices hit a record $426,900.
New Entrants in the Million-Dollar Club
While California cities dominated the list in 2023, 2024 saw new states like Colorado, Connecticut, Massachusetts, and Texas joining the ranks. Notable new entries include Wellesley Hills, Massachusetts; Old Greenwich, Connecticut; and Saratoga, New York. The Hamptons on Long Island, New York, also had four communities with average mortgage balances exceeding $1 million.
Cities with $2 Million Mortgages
As of June 2024, three cities have average mortgage balances exceeding $2 million: Bal Harbour, Florida; Atherton, California; and Hidden Hills, California. These figures highlight the growing trend of high-dollar mortgages across the nation.
Mortgage Balances Nationwide: The State of Play
No state has an average mortgage balance near $1 million, but California comes closest with an average of $443,000 as of June 2024. California also leads in the percentage of million-dollar mortgages, with 7.4% of its mortgages averaging $1 million or more. Washington, D.C., also stands out with an average balance of $506,600, where over 10% of mortgages reach the million-dollar mark.
High-Dollar Mortgages: Credit Still Plays a Role
Credit scores are crucial when applying for a mortgage, especially for high-dollar loans. Properties requiring non-conforming mortgages, typically jumbo loans, demand higher credit scores, lower debt-to-income ratios, and higher down payments. This is because banks may need to keep these loans on their balance sheets, increasing their risk. Currently, average jumbo loan APRs are about a quarter-percentage point higher than conforming mortgage rates.
Conclusion
The trend of million-dollar mortgages is growing, with more cities joining the ranks each year. If you’re considering a high-dollar mortgage, it’s essential to maintain a strong credit profile. For expert guidance and personalized mortgage solutions, contact O1ne Mortgage at 213-732-3074. Our team is here to help you navigate the complexities of the mortgage market and secure the best possible terms for your home loan.
