城市研究所-美国老年人的抵押贷款拒绝率和家庭财务状况（英）-2021.10-37页_389kb

Mortgage Denial Rates and Household Finances among Older Americans

Core Content

This research report by Karan Kaul and Linna Zhu, published in October 2021, examines mortgage denial rates and household financial trends among older Americans (ages 65 and older) from 2018 to 2020, using data from the Home Mortgage Disclosure Act (HMDA) and the 2019 Survey of Consumer Finances (SCF). It highlights the challenges older homeowners face in accessing forward equity extraction products and the role of home equity in their financial stability.

Main Findings

• Mortgage Denial Rates:
  Older applicants (ages 65 and older) face significantly higher denial rates for forward equity extraction products compared to younger applicants. For example, in 2020, the denial rate for seniors aged 75 and older was 18.7%, while for those under 65 it was 12.1%.

  • HELOCs had the highest denial rates, with 36.3% for seniors aged 75 and older in 2020.
  • Cash-out refinances also saw high denial rates, though slightly lower than HELOCs.
  • HECMs (Home Equity Conversion Mortgages) had lower denial rates, with 15.1% for seniors aged 75 and older in 2020, compared to 23.5% for those under 65.
  • Denial rates have trended down in recent years due to historically low interest rates, especially in 2020.

• Debt-to-Income (DTI) Ratios:

  • High DTI ratios are a primary reason for mortgage denials, especially for seniors. In 2020, over 30% of refinance applications by seniors aged 75 and older were denied due to DTI issues.
  • Seniors are more likely to have DTI ratios of at least 50% compared to younger applicants, which makes them less likely to qualify for forward equity extraction.
  • Low incomes and deteriorating credit scores contribute to high DTI ratios among seniors.

• Trends in Senior Debt and Home Equity:

  • The share of senior homeowners with debt has increased significantly since 1989, with 55% of those aged 75 and older in debt in 2019.
  • Median debt for seniors aged 75 and older rose by 45% from 2016 to 2019, reaching $40,000.
  • Vehicle loan balances for seniors aged 75 and older have increased, while HELOC and education loan balances have declined.
  • Despite rising debt levels, seniors maintain stable net worth, largely due to home equity.
  • Home equity constitutes a significant portion of net worth for seniors, with 55% for those aged 75 and older and 46% for those aged 65 to 74 in 2019.
  • However, the share of home equity in total net worth has been declining over time due to rising mortgage debt and other forms of debt.

• Home Equity Extraction Products:

  • Cash-out refinances and HECMs have seen increased usage among seniors from 2018 to 2020, with cash-out refinance applications rising sharply.
  • HECMs have shown a modest increase in origination numbers, but usage remains low, likely due to program restrictions, complexity, and lack of financial literacy.
  • The convenience of cash-out refinances and low interest rates have driven demand for these products over HELOCs.

Key Information

• Financial Security: Older Americans rely heavily on retirement savings and Social Security for living expenses, but savings are often insufficient.
• Home Equity Wealth: As of July 2021, home equity wealth among seniors surpassed $9 trillion, but it remains largely untapped.
• Underwriting Challenges: Forward equity extraction products are more difficult for seniors to qualify for due to higher DTI ratios and insufficient credit history.
• Need for Reverse Mortgages: Given their low incomes and high home equity, older households may benefit more from reverse mortgage-like products that are less income-dependent.

Conclusion

The report concludes that while older homeowners have significant home equity, they face higher mortgage denial rates due to increased debt burdens and lower incomes. The rise in debt, particularly among seniors aged 75 and older, has pushed DTI ratios higher, making it harder to qualify for forward equity extraction. As interest rates rise, denial rates are expected to increase again. Reverse mortgage products, which are more asset-based, could offer a viable alternative to help seniors access their home equity more effectively.