Housing is becoming a greater burden on senior finances as the percentage of the elderly paying off mortgages has soared by nearly 50%, the Consumer Financial Protection Bureau recently warned.
The number of senior homeowners with mortgages rose from 22% in 2000 to 30% in 2011. At the same time, there was a fivefold increase in the rate of delinquent mortgage holders age 65 to 74 (those with mortgage payments 90 days late or in foreclosure), who saw their numbers rise from 0.85% to 4.96%.
The CFPB is blaming a lot of the problem on the easy money lending practices of the early 2000s. The industry saw a proliferation of home equity loans, while borrowers were given refinancing terms that might have cut their current rates but prolonged those repayments into retirement. Homeowners were also permitted to make smaller down payments.
These trends have led to a spike in the median mortgage debt held by seniors from $43,400 to $79,000.
“As more seniors carry significant mortgages into retirement, they put themselves at risk of losing their nest eggs and their homes,” said CFPB Director Richard Cordray in a statement.
While delinquency and foreclosure rates have decreased since 2012, the CFPB warned that foreclosure is still a bigger problem for older homeowners, who have a harder time recovering since they are also likely facing health problems, cognitive impairment and difficulties returning to the workforce.