The housing market has been wildly hot this year. Mortgage rates near historic lows have helped encourage people to buy homes before rates rise, and to trigger efforts by current homeowners to refinance. This has driven up borrowing, and with it mortgage debt.

Mortgage debt is usually not a financial risk for lending institutions or homebuyers, particularly when the U.S. economy is doing well and increased home prices are building home equity. Unemployment in the United States is low, after the rise in joblessness at the start of the COVID-19 pandemic. Since then, household net worth across the country has risen, driven by both home equity and the stock market. The rise in home equity has been caused in part by a migration from the largest coastal cities like New York and San Francisco to less expensive cities inland. It is in these cities where demand has spiked home prices higher.

Using data from Experian’s 2021 State of Credit Report, 24/7 Wall St. identified the state with the highest average mortgage debt. States are ranked by the average debt among homeowners with a mortgage.

All other things being equal, average mortgage debt is affected most by real estate values. Overwhelmingly, in states where the median home value is less than the $240,500 national median, average mortgage debt is also below the national average. Similarly, in states with higher home values than the national median, mortgage debt also tends to be higher than average.

High real estate values also make it more likely that homebuyers will need to take out a mortgage in the first place. In nine of the 10 states with the highest median home value, the share of homeowners with a mortgage exceeds the 61.7% share nationwide.

Depending on the state, average debt ranges from as little as $128,000 to nearly $400,000.

The state with the highest mortgage debt is California. Here are the details:

• Average mortgage debt: $396,229
• Homeownership rate: 54.9% (second lowest)
• Median home value: $568,500 (second highest)
• Homeowners with a mortgage: 69.0% (fourth highest)
• Median household income: $80,440 (fifth highest)

The typical home in California is worth $568,500, over $300,000 more than the national median home value. As is often the case in areas with high home values, mortgage debt is also high in California. At $396,229, average mortgage debt in California is the highest in the country.

High home values also likely contribute to higher than average borrowing rates and lower than average homeownership rates. An estimated 69.0% of homeowners in California have a mortgage, compared to just 61.7% of homeowners nationwide, while the state’s homeownership rate of 54.9% is the second-lowest of any state and well below the 64.1% national rate.

Methodology: To determine the state with the most mortgage debt, 24/7 Wall St. reviewed data from the 2021 State of Credit Report by Experian, a consumer reporting agency. Average mortgage debt is a measure of the average first mortgage balance per consumer who had an open first mortgage account.

Figures for median home value, median household income, homeownership rates and the share of owner-occupied households with a mortgage came from the U.S. Census Bureau’s 2019 American Community Survey.

Click here to see all the states with the most mortgage debt.

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