February 12, 2025

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  • Resuming student loan payments is going to have an impact on the housing market.
  • 58% of economists polled recently say the resumption of payments will have a significant impact on mortgage affordability.
  • In another survey, 27% of borrowers said they were worried about being able to make rent or mortgage payments.

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The affordability crisis in the U.S. housing market could get worse as student loan payments resume this fall, according to a recent survey of more than 100 housing experts.

According to a recent analysis by Pulsenomics, 58% of experts surveyed believe that the resumption of student loan payments could have a significant impact on mortgage affordability. The research firm said 35% of experts believe the resumption of payments could substantially affect the US home ownership rate, and 26% believe it could substantially affect the mortgage default rate.

Student loan payments will hit back at a time when housing affordability is already strained. Fed data showed the US home ownership rate fell to 65.9% in the second quarter, while defaults at 30 large mortgage service providers rose to 3.16%, according to an analysis by Inside Mortgage Finance.

The impact of the student loan payment restart could be felt for years to come. 38% of experts said the impact on mortgage affordability could last for two years, while 43% of respondents believed it could last for three or more years.

Student loan payments are set to resume on October 1, ending a three-year payment pause that began during the pandemic. Economists have warned that this could have a huge impact on the economy and especially on housing. According to data from the US Department of Education, nearly 70% of student loan borrowers are between the ages of 25-49, which means they are around their prime home-buying years.

Meanwhile, the average borrower has a debt balance of $38,000. According to an estimate by the Education Data Initiative, the average student loan payment is approximately $502 per month, or approximately 20% of the estimated average US monthly mortgage payment of $2,605.

In a separate survey conducted by Morgan Stanley, only 29% of borrowers said they were confident they would be able to pay off their student loans, while 34% said they would be unable to pay at all.

Additionally, 31% of respondents said they were worried about making loan payments and 27% said they were worried about making rent or mortgage payments, both measures at all-time highs.

Affordability conditions in the US housing market are already the worst buyers have seen in decades. This is primarily due to high mortgage rates and a lack of available housing supply, which have kept home prices high over the past year despite a drop in demand.

Source: www.bing.com

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