The retirement plans of older homeowners are being affected by the fact that many are being buried in mortgage debt. The Consumer Financial Protection Bureau says that while the share of older homeowners with a mortgage increased from 22% to 30% between 2001 and 2011, the median amount of their mortgage debt grew from about $43,400 to $79,000.
Older homeowners (those 65 an older) are struggling to keep up with mortgage payments and less of them own their homes outright.
Says the Consumer Financial Protection Bureau:
“For many of the roughly 4.4 million retired homeowners with mortgages, making monthly mortgage payments on a fixed income on top of other monthly expenses is a hardship.”
In their report entitled Snapshot of Older Consumers and Mortgage Debt, the CFPB analyzes survey data analyzing the increasing number of older consumers who carry mortgage debt and the impact of this risk on their financial security.
Some of the study findings:
- Approximately 80% of the 41.4 million Americans age 65 and older own their home.
- While the rate of homeownership has remained constant over the last decade, the number of older homeowners holding mortgages has increased.
- The refinancing boom of the early 2000s, in addition to the tendency to purchase a home later in life, contributed to this trend of older homeowners carrying a mortgage.
- Older consumers owe more on their mortgages compared to the value of their home than ten years ago. The outstanding balance on their mortgages relative to the value of their homes (debt-to-value ratio) increased from 30% to 46% from 2001 to 2011.