The Disappearing American Mortgage The mortgage, once a cornerstone of wealth building for generations of Americans, is vanishing. Data from the Mortgage Bankers Association reveals that Americans are applying for fewer mortgages than at any point in the past 25 years, including during the worst of the Great Recession, when unemployment was more than double its current rate. Since the end of 1999, 96 of the 100 lowest readings in the MBA’s weekly index of new mortgage applications have occurred in the past three years. The American real-estate market is effectively frozen, despite mortgage rates falling below 6 percent for the first time since 2022. Few families are buying or selling homes, and little new housing is being built. High prices and rising interest costs have pushed working-class households out of the market, while wealthy individuals dominate transactions. Young people face a future of perpetual renting, with less time to build home equity and a higher risk of being poorer in retirement than their parents. This trend has multiple causes. After the Great Recession, the Dodd-Frank Act tightened lending and underwriting standards, shifting credit toward wealthy households and away from middle-income families. Mortgage lenders increased credit for affluent buyers while reducing access for working-class households. Banks prioritized services like home loans, credit cards, and brokerage accounts for the well-to-do, while neglecting basic loans for working families. These changes made the financial system safer but also made homeownership harder for many. At the same time, home builders sharply cut construction in the early 2010s, producing a quarter as many homes as before the Great Recession.#federal_reserve #mortgage_bankers_association #doddfrank_act #harvard_joint_center_for_housing_studies #chris_herbert
