Economists' Outlook

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Homeowners Struggling to Pay Bills in the Coronavirus Crisis

The Coronavirus Crisis has people struggling to pay bills: twelve percent of homeowners did not pay on time their mortgage last month, according to the U.S. Census.

New data from the U.S. Census shows that:

  • 12% of mortgage holder households did not make their mortgage payment on time; 41% of them deferred their payment,
  • Among the owners who paid on time last month’s payment, 44% of them experienced a loss of employment income,
  • 31% of those who did not pay on time used the stimulus package but it was not enough to cover the cost,
  • 63% of the owners have high confidence in their ability to make next month’s payment while 21% have moderate confidence. However, the level of confidence is lower for Hispanics and African Americans.

The U.S. Census releases the results of the 2020 Household Pulse Survey every week (starting April 23, 2020). The 2020 Household Pulse Survey (HPS), an experimental data product, is an Interagency Federal Statistical Rapid Response Survey to Measure Household Experiences during the Coronavirus (COVID-19) Pandemic, conducted by the Census Bureau in partnership with five other agencies from the Federal Statistical System:

  • Bureau of Labor Statistics (BLS)
  • National Center for Health Statistics (NCHS)
  • Department of Agriculture Economic Research Service (ERS)
  • National Center for Education Statistics (NCES)
  • Department of Housing and Urban Development (HUD)

Specifically, the HPS asks individuals about their experiences regarding employment status, spending patterns, food security, housing, physical and mental health, access to health care, and educational disruption. The survey is designed to be longitudinal, which means that this data provides insights with regard to how household experiences changed during the pandemic. Thus, the ultimate goal of this weekly survey is to understand how individuals are experiencing this period and respond to the business curtailment and closures, stay-at-home and safer-at-home orders, school closures, changes in consumer patterns and the availability of consumer goods, and other abrupt and significant changes to American life.

The National Association of REALTORS® closely monitors the results of this survey in order to address the needs and concerns of people in regards to housing during the pandemic. Particularly, the HPS provides estimates about the last month’s payment status for owner- and renter-occupied housing units and confidence in the ability to make next month’s payment.

As the data shows, 12 percent of all mortgage holder households did not pay on time last month’s payment.1 This actually translates to 12.3 million people across the country. Particularly, it is estimated that 7.3 million mortgage holders did not pay last month’s payment (partial payment, full payment but late or no payment at all) while 5.0 million deferred their payment. The HPS also provides information about the age, race, income, marital status, and household size of these homes. Taking a closer look at the demographics, most of these owners who were not able to pay last month’s payment on time were:

Mortgage Payment Status 07-20

Find out more here regarding how many homeowners were able/not able to pay on time:

The survey also provides information about how many of these mortgage holders experienced a loss of employment income due to COVID-19. Compared to the total number of mortgage holders, as mentioned above, 12% were not able to pay their payment on time. Specifically, after disaggregating late payment status by loss of income, 3% of the mortgage holders did not pay their mortgage on time without experiencing any loss of income while 9% did have a loss. It is very interesting to see that the share of owners who did not make a payment on time without experiencing an income loss (3%) is in line with the pre-pandemic mortgage delinquency rate. Specifically, the share of mortgage holders failing to pay on time is typically 3% in normal periods (with no pandemic). Moreover, based on the data, 39% of the owners who paid on time did experience a loss of employment income due to COVID-19. Since these owners were able to pay on time, this implies that this loss of income did not have a significant impact on the household or that these owners had savings in order to mitigate their loss of income.

Mortgage Payment Status 07-20

The survey also provides information about the sources that owners used to pay last month’s mortgage on time. As the data shows, 81% of these owners used regular income sources like those used before the pandemic followed by the use of credit cards or loans (25%) and money from savings or selling assets (23%). Thirty percent of them used unemployment benefits and stimulus payment. In contrast, for those owners who were not able to meet their spending needs (not paying their mortgage or deferring the payment), nearly one of two owners used the unemployment benefits and stimulus package but these benefits were not enough to cover their needs.

Owners’ Confidence During COVID

As the data shows, 63% of the owners with a mortgage have a high degree of confidence that they will make their next mortgage payment on time. In addition, 21% of the owners have a moderate level of confidence. However, breaking down by race and ethnicity, the level of confidence is lower for both African Americans and Hispanics. Specifically, the share of owners with a high degree of confidence drops to 43% for African Americans and 44% for Hispanics. This also means that more than 20% of these owners — 27% of Hispanic mortgage holders — have slight or no confidence that their household can pay next month’s rent or mortgage on time. The HPS also provides estimates at the state level regarding the mortgage payment status and the level of confidence for the next payment. A separate analysis will follow.

1According to the results for the week June 18-June 23

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