Millennial homeowners are feeling the financial pain the most during the coronavirus pandemic.
Getty
The collapse in business activity during the coronavirus pandemic has elevated levels of concern among struggling homeowners about their ability to make mortgage payments over the next three months, according to a new Bankrate.com report, which found that less than half of worried borrowers surveyed have contacted their lenders to discuss payment relief. Millennial homeowners, however, are more likely to seek help.
The pandemic is causing similar financial hardship for consumers around the world, and new research indicates Millennials are being challenged the most. A just-released TransUnion global report that includes seven regions on five continents found that three in four Millennials (76%) worldwide indicated their household incomes have been negatively affected by the pandemic, primarily as a result of reduced work hours or a spouse or partner who has lost a job. This compares to 64% for all other generations.
“Younger, newer homeowners understandably have higher levels of concern about their ability to make mortgage payments amid the uncertain economic climate,” said Greg McBride, chief financial analyst for Bankrate.com. “Having a smaller safety cushion and being earlier in a career can create feelings of unease.”
This pressure is compounded by the fact that 58% of Millennials in the U.S. surveyed by TransUnion said they have dependent children living at home, a much greater rate than the 36% noted for other generations.
In Bankrate’s April survey, homeowners revealed the pandemic has had a dramatic effect on their finances and sense of well-being, and the Millennial generation is under the most stress.
Overall, Bankrate found that levels of concern are highest among Millennial (ages 24-39) mortgage borrowers (70%), those with lower income and education levels (74% who make under $30,000 annually versus 45% who make $80,000 or more annually and 60% without a college degree versus 46% with a college degree), as well as those with children under 18 (65% versus 53% of non-parents).
Less than half (40%) of concerned borrowers have contacted their lenders to discuss payment relief, with Millennials being the most likely to seek help.
When asked why they have not reached out to their lenders, 18% of mortgage borrowers said they weren’t aware this was an option, while another 11% said they have not gotten around to it or are waiting for their lenders to contact them (5%). Remaining concerned borrowers who have not reached out to their lenders say they have figured out a solution on their own (28%) or cited an “other” unspecified reason (38%).
“For households struggling financially due to the pandemic, payment relief is available, but you have to ask for it,” said McBride.
Homeowners in a short-term financial bind might qualify for a forbearance. With this option, borrowers can temporarily suspend their payments.
“Being a homeowner, rather than a renter, means being able to control your own destiny,” explained McBride. “You’re not beholden to a landlord, and with the broad forbearance available on mortgages, homeowners experiencing financial distress should contact their lender to pursue payment relief options.”
Among those concerned borrowers surveyed who have contacted their lenders, Bankrate found 43% of mortgage holders have successfully received payment relief, while 25% were unsuccessful. Twenty percent of mortgage holders who contacted their lenders have a request in progress, while 11% were unable to reach someone or submit a request.
“The big question most everyone is asking is how long the pandemic will last and what will be the impact on the global economy,” said Charlie Wise, head of global research and consulting at TransUnion. “No crystal ball exists. And people living today have never faced a similar global pandemic with such a far-reaching impact. The good news is the research demonstrates that people are resilient, and most have figured out a plan for how they will manage their finances until economies reopen and employment opportunities return.”