Baby Boomers Accelerate into Free-and-Clear Homeownership
Fannie Mae, Washington, D.C., reported an increasing number of Baby Boomers paying off their mortgages, although as a cohort they remain behind previous generations.
In a new edition of Housing Insights, Fannie Mae’s Economic & Strategic Research Group reported among the oldest Boomer homeowners, who were age 65-69 in 2015, slightly less than 50 percent were mortgage-free, down by 10 percentage points compared with Silent Generation homeowners of the same age in 2000.
“Paying off the mortgage, once a widespread rite of passage for homeowners approaching retirement, has become less common in recent years,” the report said. “Concerns are mounting that the increasing prevalence of housing debt among older homeowners could compromise financial security in retirement by expanding housing affordability problems, crimping essential non-housing spending, increasing vulnerability to home loss through foreclosure, or limiting the accumulation of housing wealth.”
Fannie Mae said these concerns are amplified by showing the large Baby Boomer generation, with its 33 million owner-occupants, is reaching retirement age with an elevated likelihood of carrying housing debt.
Key findings of the study:
–Boomers attained free-and-clear homeownership at an accelerated pace between 2010 and 2015, a period of economic and housing market recovery.
–However, even assuming that the accelerated post-recession gains in outright homeownership continue, cohort projections reveal that Boomers are unlikely to be mortgage-free at retirement at the same rate as their predecessors.
–When compared with Silent Generation homeowners who were aged 65-69 in the year 2000, Boomers are projected to experience shortfalls in free-and-clear homeownership at the same age, ranging from 1.8 percentage points for the youngest Boomers to 10.4 percentage points for the oldest.
The study can be accessed at http://www.fanniemae.com/resources/file/research/datanotes/pdf/housing-insights-100517.pdf.
