With the COVID-19 crisis continuing to place financial strain on Americans nationwide, September proved to be a difficult month for more than 6 million households who weren’t able to make their rent or mortgage payments on time, according to a new report from the Mortgage Bankers Association’s (MBA) Research Institute for Housing America.
Some 2.82 million households — approximately 8.5% of renters — missed, delayed or made a reduced rent payment in September, while another 3.37 million— 7.1% of homeowners — missed the payment on their mortgage.
Over the last two quarters, 11.0% of renters have missed one payment, 4.0% missed two, 2.8% missed three and 3.8% missed four or more. Missed rent payments have, in total, cost rental property owners as much as $9.2 billion in third-quarter revenue.
Mortgage-carrying homeowners, while less likely to miss a payment than renters, still had their share of troubles keeping up with their housing costs over the second and third quarters. During that time, 4.7% of mortgagors missed one payment, 2.0% missed two, 1.5% missed three, and 4.2% missed four or more.
The MBA estimated that missed mortgage payments collectively totaled as much as $19.4 billion in the third quarter.
“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 and one of the study’s co-authors.
“With the current eviction moratorium expiring in January, the situation could be even more challenging for renters,” he added. “Many renter households across the country could find themselves with no place to live and no means to repay missed payments.”
More and more renters are relying on unemployment benefits to keep their finances level, the study found. The share of renters receiving unemployment insurance has risen drastically, from 3% at the beginning of April to 7% at the end of September. Compare that to mortgage borrowers, whose share receiving unemployment benefits has stayed flat at 3% from the beginning of the second quarter to the end of the third.
The study also found that 26 million borrowers missed their student loan payments in September. Unchecked missed payments could lead to mounting defaults, which Engelhardt said could mean big consequences for the future of the lending landscape.
“The tens of millions of student debt borrowers behind on their payments also has future ramifications for the housing and mortgage markets,” said Engelhardt. “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.”
Edward Seiler, executive director of Research Institute for Housing America and associate vice president of housing economics for the MBA, noted that several people across the county are still direly in need of fiscal support despite the country’s ongoing recovery and the housing market’s resilience.
“This study reveals the financial distress that many households continue to experience and highlights the need for all stakeholders to come together to provide meaningful solutions to those who will need it most in the coming months,” Seiler said.