Student loans and the USA mortgage market
To take out a mortgage in the U. S. to many citizens was always difficult, these days are not exception. The reason for this was the accumulated debts on loans for education.
Americans aged 40 years still can not pay for the combined debt to the banks. The Federal Reserve Bank of New York has published review which stands about two thirds of student loans in the USA.
And what is the most pity, is that this situation slows down the recovery of the mortgage market: the number of homeowners of 40 years of age has decreased in the last quarter of the previous year by 4. 6%, which became a record decline since 1982.
This problem is exacerbated by the bubble in the students loan that exceeds 150 billion, while interest rates for some of its existing loans is exceeded for 12%. Students have little chance to refinance debt at lower interest rates, in contradistinction to mortgage borrowers.
According to the Consumer Financial Protection Bureau (CFPB) private and federal student debt has doubled since 2007, and by 2012 had already exceeded 1 trillion. The main reason for this jump is the lack of many parents to fund their children's education after the 2008 crisis. Many families are faced with a significant reduction in the value of their homes, unemployment and decrease in pension funds assets. Thus, most of parents are forced to cut costs on higher education for their children, boosting student debts allover the whole states.
According to the financiers, if there are no significant changes in this area, many U. S. graduates will never become homeowners that, according to research by the bank JPMorgan Chase Co, will lead to the collapse of the present real estate market and a record seizure of the mortgaged property. According to the survey of Amerisave, Mortgages by Amerisave will be popular, as 9 out of 10 people said they want to have their own home. Nevertheless, demand for rental housing is now at ten-year high. As informs data of NY Federal Reserve Bank, about 37 million people have the public and private student loans.
Almost half of the loans are delayed, the borrower is not required to pay while studying at university or facing unemployment. However, in most of events, these phases increase interest debt, added to the principal of the loan.
Meanwhile, despite the weak demand for housing purchase by students in debt, real estate prices in the U. S. continue to rise. Only at the beginning of this year, housing increased in price by almost 10% year on year. This jump was not observed since April 2006. However, this figure is continuously growing for 10 months. Such trend may be indicative for the whole unhealthy mortgage market of the USA.