The Consumer Financial Protection Bureau has released a snapshot report reviewing mortgage debt challenges faced by older Americans.
The list includes more mortgage debt, less affordable housing and greater foreclosure risk. Approximately 80% of the 41 million Americans age 65 and older own their home, the highest homeownership rate among all age groups. But while their rate of homeownership has remained constant over the last decade, the percent of older homeowners holding mortgages has increased.
Much of the increase can be linked to the refinancing boom of the 2000s. Other factors include a general trend among Americans to buy their first home later in life, provide small down payments on home purchases, and borrow against their home equity to pay for a variety of expenses.
The report gathered and analyzed data from the U.S. Census Bureau, the Federal Reserve and consumer complaints submitted to the CFPB, among other sources. The reports highlights include:
More senior homeowners with mortgages: Older consumers are carrying more mortgage debt into their retirement years than in previous decades. For homeowners age 65 and older, the percentage carrying mortgage debt increased from 22% to 30% from 2001 to 2011. Among those aged 75 and older, the rate more than doubled during that same time period, from 8.4% to 21.2%.
Median mortgage debt for seniors increased by 82%: From 2001 to 2011, the median amount older homeowners owed on mortgages increased 82% from about $43,300 to $79,000. In addition to carrying increased mortgage debt, many older Americans have also accrued less home equity than their age group did a decade ago. This decline in home equity may have an outsize impact on older Americans, for whom home equity is frequently their primary or even only asset. The result is less financial security and greater financial risk.
Less affordable housing: More than half of the 4.4 million retired homeowners with mortgage debt spend 30% or more of their household income in housing related costs. Because housing affordability is threatened when housing costs exceed 30% or more of a homeowners income, this puts older Americans at greater risk of financial harm.
Senior delinquency and foreclosure rates increased five-fold after financial crisis: From 2007 to 2011, the percentage of homeowners age 65 to 74 who were seriously delinquent in paying their mortgage, meaning they were more than 90 days late or in foreclosure, increased from 0.85% to 4.96%. For those over 75, it increased from 1.01% to 5.87%. While delinquency and foreclosure rates have decreased since 2012, foreclosure among older homeowners is still a problem. Older consumers have greater difficulty recovering from foreclosure than their younger counterparts because of more health problems, cognitive impairment and difficulties returning to the work force.