Home-purchase mortgages are surging to an expected record high of almost $1 trillion this year as home sales continue to soar amid a slow economy, according to midyear forecasts by the Mortgage Bankers Association of America.
The volume of mortgages is growing because of rising home sales and higher prices and mortgages on those homes. About 6.5 million homes are expected to be sold this year, 5 percent more than last year.
The total value of home-purchase mortgages is expected to reach $989 billion, up from $873 billion. The average 30-year interest rate for the first half of this year was 6.8 percent, according to an association survey.
"Mortgage rates have remained low, partly due to the sluggishness of the economy and a lack of demand for long-term money," said Doug Duncan, the association's chief economist.
"The prices of mortgage-backed securities have been very high because investors are looking for alternatives to falling stock market prices. Higher prices means lower rates, and these lower rates are being passed on to borrowers."