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Americans’ Mortgage Debt Spikes Despite Pandemic

The pandemic has caused widespread financial burdens and struggles for many Americans. However, despite the prevailing financial uncertainty caused by the Covid-19 crisis, some financial markets have surprisingly remained intact and in some cases, grown. In fact, the housing market has seen a huge boom with mortgage debt and home loans reaching record highs in the midst of the pandemic. This dramatic growth despite a significant economic recession is surprising and a big contrast to how the recession of the late 2000s affected the housing market. As the pandemic progresses, it has become increasingly clear that its financial impacts are not like those of other recessions. 

If you are overwhelmed with mortgage debt, it’s important to take action. Taking control of the situation is the best way to minimize the long-term financial implications. Consulting a skilled debt settlement attorney is a great strategy for understanding your options. Here’s a look at how the pandemic has influenced the mortgage market. 

Mortgage Inquiries and Originations Have Increased During the Pandemic 

One of the biggest contributing factors to the increase in mortgage debt has been an increase in the number of people buying homes and applying for home loans. At the start of the pandemic consumer inquiries for mortgages were much higher than in previous years. While this may be surprising considering how much financial uncertainty the pandemic has presented, in some ways, the Covid crisis accelerated buying decisions from consumers looking towards homeownership. In fact, the pandemic caused many Americans to leave cities, buying homes in surrounding suburban areas. 

This trend highlights how differently the financial burdens of the pandemic have affected different demographics. While some Americans lost their jobs and experienced financial hardships, others in more secure situations, found themselves spending less and saving more. In many cases, these savings were directed towards buying a home. 

Historically Low-Interest Rates

Historically low-interest rates set by the Federal Reserve have played an influential role in ramping up the housing market. With interest rates at record lows, many Americans are choosing to secure mortgages at lower rates. The increase in demand has caused a surge in housing prices, explaining why average mortgage balances have seen a steady increase. 

Reduction in Mortgage Delinquency Rates and Improvements in Credit Scores  

Amidst the pandemic, there has been a dramatic drop in various kinds of debt and delinquency rates—and mortgage payments are no exception. Since the start of the pandemic, consumers are missing fewer mortgage payments than ever. Much of this decrease in delinquency is attributed to the pandemic protections enacted by Congress and certain lenders.  The decrease in late payments can be linked to the overall improvement in credit scores—especially among homeowners. 

Consult the Skilled Debt Settlement Lawyers at McCarthy Law

Most people have the financial goal of homeownership. While mortgage debt is considered to be “good debt” and helps individuals build equity, times of financial hardship can make it challenging to make payments. If you are struggling with mortgage debt and don’t know the best strategy for handling the situation, it’s essential to seek advice from a skilled finance professional. Meeting with a skilled debt settlement attorney is a great strategy for getting on top of the situation and understanding your options. 

At McCarthy Law, we are dedicated to helping our clients navigate their mortgage debt to reach a favorable debt settlement. We understand the overwhelming burden that mortgage debt can have on people’s lives and are committed to helping clients attain manageable mortgage payments. To schedule a consultation with one of our skilled debt settlement attorneys, call our office at (855) 976-5777 or fill out our online contact form.

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Jacob Hippensteel

Jacob Hippensteel focuses his practice on consumer protection and business litigation. Jacob regularly assists clients by ensuring that their rights as consumers are protected under Federal and State consumer protection laws. Jacob regularly advises clients on a wide variety of issues, as well as protecting those client’s interests in federal and state courts.