That’s the share of money owed on all mortgages that was borrowed in the last year—double the share in 2019, showing just how frenzied the housing market has been during the pandemic.
The soaring percentage, which hasn’t been this high since 2004, reflects two things, according to Federal Reserve Bank of New York researchers who released a quarterly report on debt and credit Tuesday. More existing homeowners took advantage of low rates in the last year to refinance their mortgages—including more who sought so-called cash-out refinancing, where homeowners borrow cash by increasing the amount of their mortgage. Plus, a record run on homes has pushed the volume of new mortgages and the price of homes ever higher.
In the year ending in the second quarter of 2021, mortgage originations—or the amount of loans obtained by buyers—reached nearly $4.6 trillion, a historic high, the New York Fed said.
Low mortgage rates and a desire for more space has created a boom in the residential real estate market during the pandemic, sapping the supply of homes for sale and creating stiff competition for the properties that do land on the market. Buyers this year have had to resort to tactics like waiving their right to an inspection, bidding above list price, or paying in cash to attract the attention of sellers. The supply crunch has started to ease in recent weeks, though prices have not eased yet in tandem.
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