WASHINGTON, D.C.- RealEstateRama – Over 6 million households did not make their rent or mortgage payments and 26 million individuals missed their student loan payment in September, according to third-quarter 2020 research released today by the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA).
The new findings offer fresh insights to RIHA’s study, Housing-Related Financial Distress During the Pandemic, which was first released in September. During the third quarter, the percent of homeowners and renters behind on their payments decreased slightly from the second quarter, but the overall amount remains high. In September, 8.5% of renters (2.82 million households) missed, delayed, or made a reduced payment, while 7.1% (3.37 million homeowners) missed their mortgage payment. The proportion of student debt borrowers who missed a monthly payment has remained steady – at 40% – since May.
“Rent and mortgage payment collections improved over the summer as more people went back to work, but high unemployment continues to place hardships on millions of U.S. households. There is growing concern that absent a slowdown in the number of coronavirus cases and another round of much-needed federal aid, millions of households in the coming months face the prospect of falling further behind,” said Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. “With the current eviction moratorium expiring in January, the situation could be even more challenging for renters. Many renter households across the country could find themselves with no place to live and no means to repay missed payments.”
Added Engelhardt, “The tens of millions of student debt borrowers behind on their payments also has future ramifications for the housing and mortgage markets. Borrowers ending up in default would see an adverse effect on their credit, in turn making it potentially more challenging for them to rent or qualify for a mortgage.”
RIHA’s research contains data from an innovative household survey from the Understanding America Study (UAS), an internet panel survey of over 8,000 households specially tailored to study the impact of the pandemic. Authored by Engelhardt and Michael D. Eriksen, Associate Professor of Real Estate at the University of Cincinnati, the study provides close to real-time economic data on the rapidly evolving financial consequences of the pandemic by following the same set of households from before the outbreak through the end of September.
RIHA Study – Third Quarter of 2020 Key Findings:
- Receiving unemployment insurance (UI) benefits:
- Renters – Rose from 3% at the beginning of April to 7% by the end of September;
- Mortgagors – Remained unchanged at 3% at the beginning of April and 3% at the end of September;
- Student debt borrowers – Rose from 3% at the beginning of April to 8% by the end of September
- Property owners continue to play a key role in helping renters:
- 11.0% of renters missed one payment over the two quarters, 4.0% missed two payments, 2.8% missed three payments, and 3.8% missed four or more payments.
- 13% of renters received permission from their landlord to delay or reduce their monthly payment (by week).
- In aggregate, rental property owners lost as much as $9.2 billion in third-quarter revenue from missed rent payments.
- Mortgagors were the least likely of the three groups to miss a payment during the second and third quarters:
- 4.7% of mortgagors missed one payment over the two quarters, 2.0% missed two payments, 1.5% missed three payments, and 4.2% missed four or more payments.
- Around 20% of mortgagors received permission from their lender to delay or reduce their monthly payment (by week).
- In aggregate, total missed mortgage payments were estimated to be as much as $19.4 billion for the third quarter.
- Student debt borrowers were the most likely of the three groups to miss one or more payments:
- 16.2% of student loan borrowers missed one payment over the two quarters, 8.8% missed two payments, 7.0% missed three payments, and 22.7% missed four or more payments. ·
- The percentage of borrowers reporting missed payments (by month) was around 40% in the quarter.
- In aggregate, 34.4 million individuals missed at least one student loan payment since the beginning of the pandemic.
- In aggregate, total missed student loan payments were estimated to be as much as $29.5 billion for the third quarter.