16
MORTGAGE-FREE
BABY BOOMERS?
In an October addition of Fannie Mae's
Housing Insights Series, the GSE delved into
which generation was most likely to carry
household debt, which is a concern for the
financial security of the retired homeowner.
Once a widespread rite of passage,
the report says, paying off a mortgage for
homeowners approaching retirement has
become less frequent. Studies have shown
that the rise in household debt among older
homeowners, but hasn't zeroed in on baby
boomers and how their mortgage status
has changed as they get closer to the age of
retirement.
e oldest boomers, who are already
past retirement age, are substantially less
likely to own their homes outright than their
generational predecessor.
"Among baby boomer owner-occupants
aged 65 to 69 in 2015, fewer than 50 percent
were mortgage-free, down 10 percentage
points compared with the pre-boomer group of
homeowners who were the same age in 2000,
prior to the housing bubble."
Younger boomers, however, are more
likely to have free-and-clear homeownership
than homeowners of the same age in 2000.
Of boomers aged 50 to 54 in 2015, 26 percent
owned their homes outright compared with 22
percent of homeowners who were the same age
at the turn of the millennium.
According to Fannie Mae, several economic
and housing factors could have contributed to
the acceleration of paid-off mortgages after the
housing crisis among boomers.
"Some boomers might have adopted a more
conservative stance toward housing debt in the
wake of the financial crisis and, simultaneously,
tighter credit markets likely constrained the
ability to borrow against the home," the report
said.
Additionally, the recovery in housing prices
and gains in equity that followed the housing
bust allowed boomers to move and downsize
to lower-value homes without using mortgage
financing.
"Even with recently accelerated gains in
free-and-clear homeownership, the oldest
baby boomers have reached retirement
age with a greater likelihood of carrying a
mortgage, and younger boomer cohorts are
also expected to achieve relatively low rates
of outright homeownership at retirement
unless they accelerate even further the pace of
extinguishing housing debt."
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