A paper mortgage application with a red APPROVED stamped across the top.

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Many Americans are accustomed to debt, but there's the healthy kind and there's the unhealthy kind. Credit card debt easily falls into the latter category, so news of it climbing is never a good thing. On the other hand, increasing levels of mortgage debt are often a positive sign that more people are attaining the stability that comes with owning a home. 

With that context in mind, the Federal Reserve Bank of New York just reported that U.S. mortgage debt has reached a record high of nearly $10 trillion. In fact, between July and September, mortgage debt increased by $85 billion to a total of $9.86 trillion.

Low rates are triggering mortgage activity

You'd think mortgage debt would've declined this year, given that:

  • Housing inventory has been limited
  • The economy has been sluggish
  • There's a pandemic raging, and moving right now could be complicated 

But there's a reason mortgages are up this year, and it has to do with historically low rates. Since the summer, the 30-year fixed mortgage has been available at under 3% to borrowers with top credit scores. The 15-year mortgage, meanwhile, has averaged under 2.5%.

These low rates are inspiring borrowers to go out and buy homes -- even if the selection is far from generous, and even if home prices are inflated. 

Should you get a mortgage in the near term?

Given the way mortgage rates are trending, you may be thinking of applying for a home loan yourself. But remember that right now, what you save on a mortgage rate, you might wind up paying in the form of a higher home price. 

You also have to consider the difficulty of finding a home right now. Many sellers are restricting in-person showings due to the pandemic, so buyers are being forced to rely on virtual tours more. Plus, with fewer homes on the market right now, many are subjected to bidding wars, where multiple buyers try to beat each other's offers to get a seller to accept.

All told, it's a stressful time to buy a home, so if you don't have a compelling reason to move, you may want to sit tight until 2021. If things improve on the pandemic front and the economy starts to recover, housing inventory should open up. Meanwhile, there's a good chance mortgage rates will remain low for quite some time, so don't assume that if you hold off on your home search for six months, you'll lose out. 

Delaying your mortgage application also gives you a chance to make yourself a more attractive home loan candidate. You can use the time to boost your credit score, pay off some existing debt, and increase your cash reserves. That will not only make you a more appealing borrower to lenders, but it will make your down payment more manageable as well.

Despite the craziness of 2020, mortgage activity has clearly skyrocketed. But don't push yourself to get a piece of that action. Chances are that 2021 will be just as good a time, if not better, to buy a home.