Debt Surges for Older Americans, Threatening Retirements, CFPB Says
“Rising mortgage debt is threatening the retirement security of millions of older Americans,” begins a report released today by the federal Consumer Financial Protection Bureau. “In general, older consumers are carrying more debt, including mortgage, credit card, and even student loan debt, into their retirement years than in previous decades.”
The median amount older homeowners owed on mortgages jumped 82 percent from 2001 to 2011, increasing from approximately $43,400 to $79,000. This increase is jeopardizing retirees’ financial security, according to the CFPB.
Homeowners age 65 and older with mortgage debt increased from 22 percent to 30 percent (3.8 million to 6.1 million homeowners) from 2001 to 2011, according to Census data cited by the CFPB’s Office for Older Americans. Separate Federal Reserve data cited in the report show consumers older than 75 had the greatest increase during these years. The proportion of consumers 75 and older with mortgage debt more than doubled from 8.4 percent to 21.2 percent.
“Carrying a mortgage well into retirement poses many potential challenges for older Americans who typically live on reduced income yet face increased expenditures for health and long-term care,” the report states.
The report states today’s older Americans “have accrued less home equity than their age group did a decade ago,” largely because of their increased levels of mortgage debt. Reasons for the increased debt include the mortgage refinancing boom of the 2000s and general trends of Americans buying their first homes later in life, using smaller mortgage down payments, and borrowing against home equity to pay for a variety of expenses.
The housing crisis that hit in 2007 has been especially hard on older mortgage borrowers, according to the CFPB. From 2007 to 2011, the percentage of older homeowners who were more than 90 days late in paying their mortgage or in foreclose increased five-fold. Among those older than 75, the increase was nearly six-fold.
“Snapshot of Older Consumers and Mortgage Debt,” Consumer Financial Protection Bureau: http://heartland.org/policy-documents/snapshot-older-consumers-and-mortgage-debt