Last week, we reported on why more people are buying a home later in life. According to the National Association of Realtors, the median age of first-time home buyers is now 35, up from 29 in 1981. Additionally, the median age of all homebuyers has increased from 31 to 49.
Following this today, new data A study by Harvard University’s Joint Housing Research Center shows that more people are paying their mortgages even in their 60s, 70s, and 80s.
And the amount of mortgage debt they have is also increasing. In the past, it was common for most people to have their home paid for by the time they turned 80. In 1989, only 3% of homeowners over the age of 80 still had a mortgage. today? That’s almost one-third.
“Even when you adjust for inflation, mortgage balances are much higher,” said Jennifer Molinsky of Harvard University’s Joint Housing Research Center.
He said a big reason why so many seniors still have mortgages is because many of them refinanced in the past decade or so to take advantage of lower interest rates.
“If you refinance in your 50s, the clock will start on a 30-year mortgage, but it will still be due in the 80s or later.”
Laurie Goodman of the Urban Institute said part of the reason for this is the fact that more people are buying homes later in life.
“Furthermore, home prices are increasing relative to incomes, and over time home prices are increasing far more than inflation,” she said.
This means people are taking out larger mortgages than before and taking longer to pay them back.
Anki Chen of the Center for Retirement Research at Boston University said it’s not necessarily a bad thing that more seniors still have mortgages.
“Some of that growth is definitely coming from so-called financially savvy borrowers, whose debt is not a problem for balance sheets,” she said.
But many seniors struggle with debt in retirement, she says. Many people also take out credit cards and student loans in addition to their mortgage.
Harvard’s Jennifer Molinsky tells us all As you get older, it becomes a bigger problem.
“As people reach their 80s and beyond, the need for care increases,” she says. “So not only are they paying for housing and other living expenses, but they are also paying for care, which can be quite expensive.”
And Morrissey said it is becoming increasingly impossible for seniors to pay for both housing and care.
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