Thursday, February 19, 2015

NY FED: Student Loans Are Killing Opportunities for Homeownership for 30-Year-Olds

The New York Federal Reserve Bank reports that  the growth in student debt and especially the changes in student loan repayment rates, delinquencies, and defaults  have important consequences for the borrowers. One manifestation of these effects is the connection between student debt and homeownership. While 30-year-old student borrowers were more likely to have a mortgage prior to the Great Recession, the relationship has essentially disappeared since then: mortgage borrowing has fallen for all 30-year-olds, but has fallen more for student borrowers.

I am generally not a fan of housing purchases as an investment, but given the relatively low prices of houses and the current very low interest rates, at the EPJ Daily Alert I am advising those who are looking at homes to buy now and lock in these low interest rates.

It is tragic that so many bought houses at the housing peak in 2007-2008, and so few are doing so now. It is doubly tragic that government policies drove so many youth into taking on massive student loan debt, often on useless education, which now prevents them from locking a house purchase, with a great mortgage that will act as a great hedge against the accelerating price inflation that will eventually develop.



  1. And the interesting thing will be who buys the boomer's old homes when they want to want to downsize. They have no one to blame but themselves. Greedy fools.

  2. My $215,000 student loan debt (plus my wife's $30,000) is the reason we aren't buying a house yet either, despite the fact that I make excellent money.