Dive Brief:
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Student loan debt among young adults is undermining their chances of buying their first homes any time soon, the Federal Reserve Bank of New York said this week.
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As student borrowing approaches $1.2 trillion, the number of past-due loans has risen to 11.3%, higher than any time in the past year, the New York Fed reported.
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Making monthly payments on student loans can impede a would-be homeowner’s effort to save for a down payment. But borrowers who get behind on those payments or default on their loans deal another blow to their chances of homeownership: They ruin their credit ratings, which could prevent them from qualifying for mortgages, the report noted.
Dive Insight:
Fed economists noted that consumers with student debt are less likely than those without debt to own their homes. But others have speculated that while college loans delay homeownership, they don’t eliminate the chance that the debtors eventually will buy property.
Still, Bloomberg pointed to a September study by John Burns Real Estate Consulting that said student debt wiped out $83 billion in potential home sales last year.
