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The restart of student loan payments is about to hit the housing market.
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58% of economists polled in a recent survey say the resumption of payments could have a serious impact on mortgage affordability.
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In a single other survey, 27% of borrowers said they were anxious about having the flexibility to make rent or mortgage payments.
The affordability crisis battering US housing market could get even worse as student loan payments restart this fall, based on a recent survey of over 100 housing experts.
58% of polled experts imagine that the resumption of student loan payments could have a serious impact on mortgage affordability, based on a recent evaluation conducted by Pulsenomics. 35% of experts believed the resumption of payments could significantly hit the US homeownership rate, and 26% believed it could significantly impact the mortgage delinquency rate, the research firm added.
Student loan payments will loosen up in at a time when housing affordability is already strained. The US homeownership rate slipped to which slipped to 65.9% over the second quarter, Fed data shows, while delinquencies at 30 large mortgage servicers rose to 3.16%, based on an evaluation from Inside Mortgage Finance.
The results of the scholar loan payment restart is also felt for years to return, too. 38% of experts said the impact on mortgage affordability could last for as much as two years, while 43% of respondents believed it could last for 3 or more years.
Student loan payments are set to resume on October 1, ending a three-year payment pause that began in the middle of the pandemic. Economists have warned that will weigh heavily on economy, and on housing particularly. Around 70% of student loan borrowers are between the ages of 25-49, based on US Department of Education data, meaning they’re around their prime homebuying years.
The everyday borrower, meanwhile, has an debt balance of $38,000. That makes the common student loan payment around $502 a month, based on an estimate from the Education Data Initiative, or around 20% of the estimated median US monthly mortgage payment of $2,605.
In a separate survey conducted by Morgan Stanley, only 29% of borrowers said they were confident they’d have the choice to make their student loan payments, while 34% said they’d be unable to make payments the least bit.
Furthermore, 31% of respondents said they were anxious about making debt payments and 27% said they were anxious about making rent or mortgage payments, with each measures notching an all-time-high.
Affordability conditions throughout the US housing market are already the worst buyers have seen in a few years. That is essentially resulting from high mortgage rates and a dearth of accessible housing supply, which has kept home prices elevated over the past 12 months concurrently demand has fallen.
Read the unique article on Business Insider