Student-loan borrowers retreated from home buying for the second year in a row, outpaced in the mortgage market by young people who aren’t saddled with college debt, according to a report.
Among those ages 27 to 30, 22.3 percent of those without student debt had mortgages, one percentage point higher that those paying back college loans, the Federal Reserve Bank of New York said today in a study that accompanied its first-quarter report about consumer debt and credit. In 2011, a quarter of people in both groups had home loans,
The decline in home-purchase ability for those with student loans is an example of education debt’s drag on the U.S economy. More than $1.1 trillion in education debt -- taken out by students and their parents -- is outstanding, according to the report. The failure of young consumers to enter the housing market remains a puzzle, Meta Brown, Sydnee Caldwell and Sarah Sutherland wrote in the Liberty Street Economics blog.
“Many factors could be contributing to this phenomenon, including growing student debt balances, limited access to credit, lowered expectations for future earnings, and perhaps even a cultural shift,” they wrote.
Average credit risk scores of those with student debt are lower, too, than those without in two age groups. At 25, there is a difference of 16.5 points, and by age 30, the spread is 24.4 points.
The proportion of those with student debt isn’t having the same impact with auto loans, according to the report.
When compared with other types of consumer credit, student debt has the highest share of balances 90 or more days delinquent at 11 percent, according to the report. The rate fell from 11.5 percent in the previous quarter. The proportion represents all borrowers, even those in school and not expected to be paying on their loans.
The default rate for federal student loan borrowers was 14.7 percent for the first three years that students are required to make payments, up from 13.4 percent the year before, according to the Education Department.
The New York Fed’s loan totals are based on figures from a nationally representative sample provided by the Equifax Inc. credit bureau.