Average Hawaii mortgage debt increased to $409,068 in 2024

In many ways, 2024 was a continuation of the previous year: a slow increase in total mortgage debt as new higher-cost mortgages replaced any mortgage debt that was paid off over the past 12 months.

As a result, total American mortgage debt increased from $11.62 trillion to $12.11 trillion as of the third quarter (Q3) of 2024. This marks an increase of about $490 billion, or 4.2%. The total mortgage debt balance outpaced the rate of inflation, which slowly dropped from a 3.7% annual rate to 2.4% over the same period.

Mortgage rates during the period covered here ranged from 6% to 7%, which isn't appreciably lower than the prior year. So if the housing market in 2024 felt as futile as it did in 2023 for many would-be homebuyers and movers, it's hardly surprising.

Other housing market inputs also remained the same as in the previous 12-month period, like the number of new housing units built and competition from all-cash buyers, who are often institutional investors with an eye toward renting the housing instead of creating an owner-occupied unit. Small wonder, then, that in some more expensive cities, the millennial homeownership rate is two-thirds that of the overall population, according to Freddie Mac.

Facing all the above headwinds, it's no surprise that the data shows evidence of discouraged homebuyers. In 2024, mortgage originations remained depressed for most of the year. (One ray of optimism: Although outside the scope of this analysis, there was a slight rebound in mortgage originations in Q4 2024.)

As industry analyst Redfin recently noted, the tail-end increase in 2024 could indicate that homebuyers are "growing accustomed to the idea that rates are unlikely to fall to pandemic lows anytime soon."

Average mortgage balances increased by roughly $8,000 to $252,505 in 2024. That's up 3.3% from $244,498 in 2023. It's a predictable echo of home cost increases over the past year.

Home prices nationwide increased by 4.3% through the 12 months ending in Q3 2024, according to the Federal Housing Finance Agency—slightly less than the 5.5% annual clip in 2023.

Average mortgage balances increased more gradually than most, but not all, types of other consumer debt. Credit card balances, fueled by increasing interest accruing on existing balances, grew slightly more than average mortgage balances. Auto loan balances grew slightly less than mortgages now that dealership inventories have returned to normal levels.

Borrowing costs for each of these debt categories were largely unchanged from 2023 to 2024. Credit card APRs didn't start declining until the Federal Reserve began cutting rates in September, auto loan rates declined only modestly, and mortgage rates wobbled between 6% and slightly above 7% in 2024.

The average FICO® Score for those with a mortgage was 758 in 2024, the same as in 2023. Like FICO® Scores more broadly, credit profiles of mortgage borrowers have steadily improved over the past 15 years.

Although a good FICO® Score or better is usually necessary to get a homebuyer's foot in the door, creditworthiness doesn't seem to be a problem for most already in the housing market. Borrowing costs, interest rates and home availability represent the main hurdles for most would-be homebuyers.

According to Experian data, younger homeowners have larger mortgage balances on average than older mortgage borrowers. That's only logical given higher home prices and the fact that younger homeowners are more likely to have recently begun their decades-long journey of paying back a home loan.

Although the average mortgage balance increase was 3.3% in 2024, heavier burdens fell on the younger generations who've chosen to accept both higher-priced homes and higher mortgage rates than their elders'. Generation Z saw mortgage balances increase by 6.5% in Q3 2024 to $249,744, nearly mirroring the nationwide average. Millennial average mortgage debt increased by 4.1% to $312,014. Older generations saw shallower increases in average balances, though growth trends show that even older consumers still have some appetite for additional home borrowing costs.

The gap in the growth in mortgage balances between younger and older generations was quite pronounced in 2024, however, which seemingly backs up much of the conventional wisdom about the current housing market. Many would-be first-time homebuyers are increasingly being crowded out of the homeownership market: Repeat buyers and private equity investors outnumbered first-time buyers by 3 to 1 in 2024. In 2024, the median first-time homebuying age was 38, according to the National Association of Realtors. That's a huge three-year increase from 2023, when the median age was 35, and light years from 1993, when it was 32.

In other words, fewer millennials are buying homes, and time is running out for them to even remotely approach homeownership rates of previous generations.

In 2024, Hawaii had the 3rd highest average mortgage balance among all states.

Among the states, average mortgage balances increased by the relatively narrow range of 1% to 5% in 2024. Homeowners in two smaller markets, Vermont and Washington, D.C., saw average mortgage balances increase by about only 1%.

Mortgage balances increased the most in Florida, Massachusetts and Tennessee, where balances grew by close to 5% in 2024. Each state has a different possible explanation for the swelling. In Florida, rising home insurance costs as well as state-mandated condominium repairs have resulted in homeowners borrowing more against their home equity, which drives up the mortgage balances seen here. Massachusetts sports one of the hotter real estate markets (in Boston), and Tennessee is currently a Plan B destination for a number of retirees so far this decade.

It's difficult to expect any sort of relief for prospective homebuyers in 2025. Here are some of the many reasons below, in no particular order.

Housing Inventory at Historical Lows

The U.S. continues to have fewer homes than households. Real estate experts and financial institutions put the housing shortage at anywhere from 1.5 million to 5.5 million units.

According to National Association of Realtors data, the number of homes available on the market at any one time remains at lower than historical levels. While more than 1 million homes were generally for sale at any given time prior to 2020, home inventory as of January 2025 still hasn't recovered to pre-pandemic levels.

Less supply tends to drive home prices upward too. The only silver lining: Since nobody's buying these listings (largely due to higher financing costs), inventory is slowly building up.

The lock-in effect is a contributor as well: Some current homeowners would love to move (and put their current abode on the market) but are wary of finding an affordable alternative. Experts say that for those intrepid enough to try again this spring and summer, it pays to take your time setting a budget and getting your finances in order, and then be ready to act quickly when you find what you want.

Home Insurance Costs Keep Rising

Higher insurance costs and concerns about its availability in some markets are also keeping buyers on the sidelines. When approving mortgages, mortgage underwriters consider not only the cost to would-be borrowers to repay the loan, but also the cost of property taxes and insurance. If income isn't sufficient to cover the mortgage, taxes and insurance, a mortgage application might be denied.

Current mortgage rates are hovering around 7%, and aren't guaranteed to fall. Inflationary pressures—supply shortages and labor shortages—could force rates even higher. Allen reminds us that, although mortgage rates are higher than many consumers remember, "Even at 7%, mortgage rates are not, by historical standards, ridiculously high. People have succeeded in bundling generational wealth through homeownership at these rates."

The U.S. Treasury is currently looking to keep the 10-year rate low, possibly because mortgage rates are associated with closely tracking it—so if the 10-year Treasury yield falls, so does the rate for 30-year mortgages, the thinking goes.

Two potential snags:

1. Although the conventional 30-year mortgage rate closely tracks 10-year treasury yields, the link isn't perfect. At times, including quite recently, institutional investors on Wall Street don't favor mortgage-backed securities that bundle all those homeowner mortgages. In other words, those mortgage-backed security prices fall, and mortgage yields effectively rise.
2. The Treasury doesn't have a direct grip on longer-term Treasury yield in the same way the Federal Reserve can control short-term interest rates by using its ability to set the fed funds rate as a policy tool. The markets ultimately set the borrowing costs and yields on longer-term debt, not the government. It remains to be seen how exactly the Treasury can effectively keep yields low in the face of multiple inflationary pressures—not the least being labor shortages in the construction industry.

Home Prices Are Still Climbing

The U.S. median home sales price in Q3 2024 was $415,300, according to U.S. Department of Housing and Urban Development data. That's nearly $100,000 more than five years prior. Fortunately, at least for some, housing prices are still largely a local affair. Although home prices have increased in nearly all local markets since 2020, they haven't all increased by 25%. If not bargains, more reasonably priced housing markets still exist.

Methodology

The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.