Housing Finance at a Glance: Monthly Chartbooks
The July 2019 edition of At A Glance, the Housing Finance Policy Center’s reference guide for mortgage and housing market data, includes updated figures describing cash-out refinances, mortgage credit availability, originator profitability and mortgage insurance activity.
Share of Owner-Occupant Households with a Mortgage Falls to Post-Recession Low
According to the Federal Reserve Board’s Financial Accounts of the United States, the total residential mortgage debt outstanding (MDO) has grown 9.9 percent since falling to a post-recession low of $9.4 trillion in the first quarter of 2015. However, the $10.4 trillion total debt as of Q1 2019 is still 3.2 percent below $10.7 trillion, the pre-crisis peak reached in Q1 2008.
The decline in MDO since 2008 partly reflects the decrease in the number of owner-occupant households with a mortgage. Between 2008 and 2017, the number of owner-occupant households with a mortgage declined by 3.2 million from 51.6 million to 48.4 million.
At the same time, the number of owner-occupant households without a mortgage has steadily climbed by 4.7 million over the same period, from 23.8 million in 2008 to 28.5 million in 2017, representing a net gain of 1.5 million owner-occupant households. As a result, the share of owner-occupant households with a mortgage has fallen from 68.4 percent in 2008 to 62.9 percent in 2017, its lowest level since at least 2005. Conversely, the share of owner-occupant households without a mortgage has climbed to 37.1 percent over the same 9-year period.
The shifting composition of owner-occupant households with and without a mortgage may be due to a number of reasons including the surge in all-cash sales in the years immediately following the recession, households’ focus on debt reduction, and tighter credit availability conditions (see page 13). It also reflects intergenerational dynamics. Older households are much more likely that younger households to have paid off their mortgage. Although the share of elderly with a mortgage has increased gradually over time (figure 2), at 38 percent for those ages 65 and older, it is well below the 80 percent for those in the 35 – 54 age bucket. The transition of the large numbers of baby boomer generation into older age groups is thus boosting the number of owner-occupant households without a mortgage.
Whether the share of owner-occupant households with a mortgage continues to drift downward will depend of the interplay between multiple factors. These include the pace at which young, first-time homebuyers purchase homes, which in turn depends on housing affordability, credit availability, and the general strength of the overall economy including the job market. To a lesser extent it will also depend on the degree to which elderly households have a mortgage.