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31
WHY ARE MORTGAGE
DELINQUENCIES
SPIKING AMONG
OLDER AMERICANS?
Mortgage delinquency rates rise for US
consumers beyond a certain age, according
to a recent report from analytic software firm
FICO. Scott Shulz, FICO data scientist,
points out that while older people have higher
credit scores in general than young people,
both mortgage and auto delinquencies are
rising for many older Americans.
FICO's chart shows the serious
delinquency rate by age over the prior two
years for various credit products and the
report notes that the analysis is limited to
consumers with activity during the period.
For 90+ delinquency rates for mortgages and
other closed-end loans, the lowest points are
reached for consumers in their late 60s or early
70s, before rising again. Conversely, the report
says that delinquency rates for revolving trade
lines (which include credit cards) decrease
throughout consumers' lives.
"For most loan types, delinquencies peak
when consumers are in their 20s and starting
to take loans," said Schulz. "Mortgage
delinquencies have a flatter curve and peak
later, at age 44. Delinquency rates rise for auto
loans and mortgages held by people in their
late 60s, but only for mortgages do they get
near their earlier peak."
Despite the fact that their delinquency
rates are reported to increase, older Americans
only represent a relatively small portion of
the total debt tracked by the bureaus. For
example, consumers aged 67 or older represent
20 percent of the bureau population, but
they have only 11 percent of the total debt on
the bureau, and only 11 percent of mortgage
balances.
A report from MBA suggests that these
increases were due, in large part, to failing
memories in older consumers.
"It may be that older people forget to pay
their bills sometimes, but there are other
possible reasons," Schulz said. "Much of the
delinquency uptick is driven by a relatively
small number of borrowers who still have
sizeable mortgage and auto debts into their 70s
and 80s. is suggests that some delinquencies
may very well be due to a common occurrence
in lending – those who have the resources pay
off their loans over time, leaving only those
more financially strapped consumers in the
loan pool."
