In the second quarter of 2020 nearly 11 million households fell behind on their rent or mortgages – however nearly triple that number, approximately 30 million individuals, missed at least one student loan payment, according to a recent report from the Mortgage Bankers Association’s Research Institute for Housing America.
The data compiled from the Understanding America Study was the result of a panel survey tailored to study the impact of the pandemic specifically on mortgagors, renters and student loan borrowers.
According to the survey, evidence suggests that student debt is affecting housing-market behavior, in particular, how rising student debt burdens may have crowded out first-time-home purchases among Millennials.
Every additional $1,000 of student debt lowers the homeownership rate by approximately 2% – a sizeable effect, according to the report. This bolsters the findings of other studies, including a 2017 study by the National Association of Realtors where more than 75% of respondents with student loans said their educational debt impacted their decision to purchase a home.
Over the span of the second quarter, 5% of mortgagors missed one payment, 2.8% missed two payments, and 3% missed all three payments. Student loan borrowers, however, struggled to make payments more than mortgagors and renters – while 9.3% of student loan borrowers missed one payment over the quarter, 16.4% missed two payments, and 12.9% missed all three payments.
“In the pandemic, missed student loan payments or deferrals could adversely affect the ability in the future for younger households to enter the housing market or slow the climb of the housing ladder,” the release said.
Through the second quarter, 65% of borrowers reported receiving permission from their lender to delay or reduce their monthly payment – though only 57% took the offer. Nearly a third, 30.6%, of those who did receive permission missed a payment.
By race and ethnicity, the percentage of borrowers reporting missed student loan payments was on average over the quarter 54.5% for Blacks, 49.7% for Latinx, 45.0% of Asian/Hawaiian/Pacific Islanders, 44.4% for Whites, 42.3% for White Non-Latinx and 37.1% for Native Americans, the report said.