RIHA: Less Than 10% of Homeowners, Renters Have Missed Multiple Payments During Pandemic
Slightly under five million households did not make their rent or mortgage payments in March, an improvement from December 2020 and the lowest number since the onset of the COVID-19 pandemic, new research from the Mortgage Bankers Association’s Research Institute for Housing America reported.
The RIHA study, Housing-Related Financial Distress During the Pandemic, found 7.7 percent of renters (2.56 million households) missed, delayed or made a reduced payment in March, while 4.9 percent homeowners (2.33 million) missed their mortgage payment. In addition, 26 million student debt borrowers (41.4 percent) missed payments, consistent with the steady monthly share of around 40 percent since March 2020.
Overall, 23.7 percent of renters and 14.2 percent of homeowners have missed at least one housing payment during the pandemic, but only 8.6 percent of renters and 6.8 percent of homeowners missed more than two payments. The study found 37.1 percent of student debt borrowers have missed more than two payments.
“The rapidly improving economy and labor market, increased vaccination rates and promising trend of declining COVID-19 cases all bode well for those who are still facing unemployment or underemployment because of the pandemic,” said Gary Engelhardt, Professor of Economics with the Maxwell School of Citizenship and Public Affairs at Syracuse University. “However, millions of families are still facing economic distress, despite improving conditions since last March.”
Engelhardt noted the economic forecast is brightening heading into the summer. “Getting closer to consistent, pre-pandemic levels of economic activity and employment will allow households the ability to resume their housing and student debt payments and pay back past-due amounts,” he said.
Other report key findings:
• Slightly fewer renters, homeowners and student loan borrowers missed payments in March than in December 2020.
– 2.56 million renters (7.7 percent) and 2.33 million homeowners (4.9 percent) missed payments in March, down from 5 million households that missed payments in December (7.9 percent of renters and 5.0 percent of homeowners).
– 26.0 million student debt borrowers missed payments, a small decrease to around 41.4 percent of total borrowers (from 42.6 percent in December).
• Apartment landlords continue to play a key role in helping renters:
–76.3 percent of renters made all their rental payments over the past 12 months, 10.7 percent missed one payment, 4.4 percent missed two payments, 2.5 percent missed three payments and 6.1 percent missed four or more payments.
– On average, in the first quarter, 9.8 percent of renters received permission from their landlord to delay or reduce their monthly payment.
– In aggregate, rental property owners lost as much as $7.85 billion in first-quarter revenue from missed rent payments. This was up from more than $7.41 billion in the fourth quarter.
–Over the past year, aggregate missed rental payments have reached $35 billion.
• Homeowners were the least likely of the three groups to miss a payment over the past four quarters:
– 85.8 percent of homeowners made all their mortgage payments, 5.6 percent missed one payment, 1.8 percent missed two payments, 1.4 percent missed three payments, and 5.4 percent missed four or more payments.
– On average, in the first quarter, 16 percent of homeowners received permission from their lender to delay or reduce their monthly payment (by week). This was down from 17.8 percent in the fourth quarter.
– In aggregate, total missed mortgage payments were estimated at $13.2 billion for the first quarter (vs. $14.5 billion for the fourth quarter).
– Over the first year of the pandemic, aggregate missed mortgage payments reached nearly $68 billion.
• 2.3 million renters feel they are at risk of eviction or being forced to move in the next 30 days.
– On a weekly basis since August, between 6 percent and 8 percent of renters feel that they will be evicted or forced to move in the next 30 days.
▪ Up to 5 percent of renters who missed no payments over the past nine months feel they are at risk.
▪ 33 percent of renters who missed 11 payments and 44 percent of those who missed all their payments in the past 12 months feel they are at risk.
• 1.2 million homeowners feel they are at risk of foreclosure or being forced to move in the next 30 days.
– On a weekly basis since August, between 2 percent and 3 percent of mortgagors feel that they will go into foreclosure or be forced to move in the next 30 days.
▪ 2 percent of mortgagors who missed no payments over the past nine months feel they are at risk.
▪ 7 percent of mortgagors who missed 11 payments and 13 percent of those who missed all their payments in the past 12 months feel they are at risk.
• Receiving unemployment insurance benefits:
– Renters: Rose from 3 percent at the beginning of April 2020 to 7 percent by the end of September. UI benefits have trended down very slowly since, to just over 6 percent in the first two weeks of April.
– Homeowners: The share has trended slightly down to 7 percent in the first two weeks of April.
• Student debt borrowers were the most likely of the three groups to miss one or more payments:
-13.3 percent of student loan borrowers missed one payment over the past 12 months, 7.7 percent missed two payments, 5.5 percent missed three payments and 31.6 percent missed four or more payments.
– In aggregate, 36.6 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 $32 billion for the first quarter and $123 billion in the first year of the pandemic.
RIHA’s research contains data from an innovative household survey from the Understanding America Study, an internet panel survey of more than 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 March 2021. Findings were previously released in February (fourth-quarter 2020 findings), October 2020 (third-quarter 2020 findings), and September 2020 (second-quarter 2020 findings).
“RIHA’s study continues to provide an accurate, real-time picture of households’ ability to make their housing and student debt payments during the COVID-19 pandemic,” said Edward Seiler, Executive Director of the Research Institute for Housing America and MBA Associate Vice President of Housing Economics. “The expected acceleration in hiring and economic growth during the rest of the year should help most affected households resume their housing and student debt payments before expanded unemployment benefits expire at the end of September.”
MBA’s RIHA is a 501(c)(3) trust fund. RIHA’s chief purpose is to encourage and assist – through grants to distinguished scholars and subject matter experts, educational institutions, research facilities, and government organizations – establishment of a broader-based knowledge of mortgage banking and real estate finance. Additional studies can be found on the RIHA website.