National Mortgage Debt Tops $12.6 Trillion Amid Rising Rates and Costs

Vermont saw the largest mortgage debt increase in 2024.

A development of new homes in Eagleville, Pa., on April 28, 2023. Matt Rourke/AP

A new WalletHub report indicates that total national mortgage debt is now over $12.6 trillion, with the average American household currently owing $105,000 on their mortgages. The report blames rising interest rates and housing costs for making home ownership more challenging.

Vermont, the sixth-smallest state in the nation, experienced the largest increase in mortgage debt at the end of 2024, with the average balance rising by 2.63 percent to $208,730.

“Vermont has a high median annual income, and a lot of people fleeing places like New York may be willing to take on a larger mortgage in exchange for a less stressful lifestyle,” WalletHub analyst Chip Lupo told The Epoch Times. “While the increase may not seem like a large number, no other state saw growth above 2 percent.”

In general, noted Lupo, Vermont residents tend to carry higher mortgage balances with the average monthly payment at $1,666.

A U.S. Census Bureau report from the fourth quarter of 2024 shows that Vermont gained more than 7,500 new residents from 2023 to 2024. The bulk of the newcomers relocated from other parts of the Northeast, specifically from Massachusetts, New York, New Hampshire, Connecticut, and Pennsylvania.

According to Redfin, Vermont is often referred to as the “gem of New England” because of its beautiful landscapes, quaint towns, and rich history. While the median home price of $421,400 is higher than the national median, the state’s wealth of outdoor recreational venues tends to attract individuals and families seeking more access to nature. In addition to a large network of hiking trails, Vermont offers lakes and rivers with water activities, as well as some of the best skiing locations in the country.

Delaware ranked second for the highest increase in mortgage debt, with a 1.65 percent increase, bringing the average balance to $203,487. Homeowners there typically spend $1,611 per month on mortgage costs. However, Delaware’s personal loan debt saw an 8 percent decrease during the past year, which may help homeowners better manage their debt.

Massachusetts followed in third place with a 0.97 percent rise in mortgage debt and an average mortgage balance of $302,242. Residents there pay an average of $2,380 per month toward their mortgage.

Minnesota and Hawaii rounded out the top five states with the highest mortgage debt increases. The report found that only these five states had average mortgage balances above $300,000.

According to a recent report from the Mortgage Bankers Association (MBA), mortgage applications increased by 11 percent for the week ending May 2, compared to the previous week.

“Conventional purchase application volume increased 13 percent and was up 9 percent from year-ago levels, a surprisingly strong move given lingering economic uncertainty,” Mike Fratantoni, senior vice president and chief economist at MBA, said in a statement. “Borrowers of conventional loans tend to have larger loan sizes and more apt to be move-up buyers.”

The MBA reported that the current 30-year fixed rate is holding around 6.84 percent but forecast that the rate could rise to 7 percent before dropping to 6.7 percent by the end of this year, and 6.4 percent by the end of 2026.

MBA’s weekly applications survey indicates that refinance applications have increased past 2024 levels, with borrowers holding larger loans and government loans accounting for most of the refinance activity in recent weeks. Purchase applications have also exceeded last year’s levels since the end of January, with the latest reading showing a 24 percent gain compared to a year ago.

Lupo noted that the WalletHub report is designed to help potential homeowners seek out the most economically friendly areas for their budgets.

“In addition to the price of the home, they should also consider property taxes, home insurance, closing costs, and any other upfront costs like major repairs needed,” he said.

“But even if the mortgage may be affordable, they should do a thorough review of the area to be sure it’s in a place where they want to be spending the next few years.”

Those states experiencing the smallest mortgage debt increases over the last year were Kansas, West Virginia, Nebraska, South Dakota, and Montana.

Offering tips for paying off mortgage debt, Lupo suggests that homeowners consider making additional payments toward the mortgage whenever possible and allocating those funds toward the principal payment.

Switching to bi-weekly instead of monthly payments can also help, Lupo said.

“This results in 26 half-payments, or 13 full payments per year instead of 12 and over time this can shave years off your mortgage term,” he said.

Applying unexpected monies such as tax refunds, bonuses, or inheritances to mortgage payments will also help reduce the outstanding balances, and tightening your monthly budget is yet another way to add a few more dollars towards the balance, Lupo said.