Delinquencies Fall Even as Non-Mortgage Debt Grows: Black Knight
While mortgage loan delinquencies continued to fall in June, non-mortgage debt continues to mount, according to data from Black Knight Financial Services. This added debt could affect a consumer's ability to keep making mortgage payments or buy a new home.
Mortgage holders now have an average of $25,000 per borrower in non-mortgage debt, $1,400 higher than a year ago and $2,600 more than in 2011. Much of the increase stems from auto-related debt, which makes up 81% of the overall increase from four years ago.
Student loan debt has also skyrocketed — 15% of mortgage holders carry student loans, with an average balance of roughly $35,000. The situation is most pronounced for Federal Housing Administration borrowers — roughly 25% of all active FHA loans carry student loan debt versus just 13% for loans distributed by government-sponsored enterprises.
"The more total debt borrowers are carrying and the higher monthly non-mortgage payments they have, the less money they have to put toward a new home purchase, or potentially even their current mortgage obligations," said Black Knight Data & Analytics senior vice president Ben Graboske in an Aug. 3 news release. He also noted a correlation between non-mortgage debt and inquiries about a new mortgage, "with those who have recent mortgage inquiries on their credit reports carrying nearly 40% more debt than borrowers who do not."
Black Knight also noted that in 2015 through May, the number of underwater borrowers has decreased 26% to 6.1% of active mortgages. This figure improves for certain states — a third of borrowers in California who started the year underwater on their mortgage are no longer in a negative equity position.