Survey: Student Loan Debt Is Holding Back Potential Home Buyers

Posted by Patrick Barnard on June 14, 2016 No Comments

A nationwide survey of student loan borrowers who are non-homeowners reveals that about 71% see their student loans as a hindrance to getting a mortgage and purchasing a home.

The April survey of 3,230 “current” student loan borrowers included 33 questions and had a response rate of about 4.3%. It was conducted by the National Association of Realtors (NAR) and SALT, a consumer literacy program run by American Student Assistance.

Of those who responded, about 71% say repaying their student debt is stymieing their ability to purchase a home. In addition, slightly over half say they expect to be delayed from buying by more than five years due to their debt.

What’s more, four in 10 say their student debt is preventing them from moving out of a family member’s household.

Broken down by each generation and debt amount, the percent share is the highest among older millennials approximately aged 26 to 35 (79%) and those with $70,000 to $100,000 in total debt. Regardless of the outright amount of student debt, more than half of non-homeowners in each generation report that it’s postponing their ability to buy.

“A majority of non-homeowners in the survey earning over $50,000 a year – which is above the median U.S. qualifying income needed to buy a single-family home – reported that student debt is hurting their ability to save for a down payment,” says Lawrence Yun, chief economist for NAR, in a statement. “Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase.”

More than three-quarters of millennials who took the survey say student debt is preventing them from saving for a down payment. Additionally, 69% don’t feel financially secure enough to buy, and 63% can’t qualify for a mortgage because of high debt-to-income ratios.

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