High-balance states face pressure as buyers seize negotiating power in cooling markets
Americans are carrying more mortgage debt than ever, with the national total now topping $12.6 trillion and the average household owing nearly $105,000, but not all states are adding debt at the same pace.
A new report from WalletHub identified the top states where mortgage debt has grown the most, providing insight into where homeowners are shouldering the largest balances.
Between Q3 and Q4 2024, Vermont recorded the sharpest jump in mortgage debt among all 50 states, with average balances rising 2.63% to $208,730. That may seem like a modest increase, but as WalletHub points out, no other state saw a rise over 2% — and 23 states actually posted a decline in average mortgage debt over the same period.
“Mortgage rates are the highest they’ve been in around a decade, and home prices have seen a meteoric rise in recent years as well,” said John Kiernan, editor at WalletHub. “Even small increases in home prices can lead to thousands of dollars in extra mortgage interest costs for homeowners, so it’s important to choose wisely when deciding where and when to buy a house.”
In Vermont, the typical homeowner now pays about $1,666 per month on their mortgage, not counting the added burden of relatively high property taxes.
Delaware ranks second on the list, with a 1.65% quarterly increase bringing average mortgage balances to $203,487. Homeowners there pay an average of $1,611 per month, though the state ranks just 34th for overall affordability.
Massachusetts comes in third, though its 0.97% increase barely edges out other states. Still, the $302,242 average mortgage balance places it among just five states with an average over $300,000. The typical monthly payment there hits $2,380, making it the sixth-highest in the nation, but Massachusetts ranks as the most affordable state overall, helping homeowners better manage the debt load.
While debt continues to grow in some states, Redfin reported that 12 of the 50 most populous metro areas saw monthly mortgage payments drop over the past year, thanks to lower rates and cooling home-sale prices.
The biggest improvement was in Jacksonville, Fla., where the average monthly mortgage payment fell 4.2% to $2,482. Other notable declines were in San Francisco (down 3.5% to $10,054) and Oakland (down 2% to $6,638). Additional metros seeing declines included Seattle, Portland, Tampa, Orlando, Austin, Dallas, West Palm Beach, Nashville, and Denver.
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Redfin noted that the average 30-year fixed mortgage rate dropped to 6.65% in March, down from 6.82% a year earlier, helping ease monthly payments in some regions. Meanwhile, median home-sale prices stayed flat or fell year over year in nine of these metros.
According to Redfin Premier agent Ali Mafi in San Francisco, economic jitters are shifting the balance of power toward buyers in some high-cost markets.
“I recently had a client who was looking at a single-family home that had been sitting on the market,” Mafi said. “I told him, ‘you’re in the driver’s seat; now is your chance to get a deal on a house in a neighborhood where you’d normally never get a deal.’ Buyers are having luck negotiating because many of the people who need to sell now — those who are relocating, for example — are anxious and eager to sell quickly, before the economy potentially gets even more uncertain.”
Even with some mortgage rate relief, nationwide demand has softened as buyers weigh widespread economic instability, including new tariffs and the rising risk of recession.
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