U.S. household equity is almost to its previous, pre-housing crisis peak, but mortgage rates have fallen over the course of the past decade, and home ownership rates are at a 51-year low.
According to Laurie Goodman, co-director of Urban’s Housing Finance Policy Center, these lower levels of home ownership come from later-life marriages, higher student loan debt for non-graduates, and flat salaries following the recession, as well as “a subtle shift in attitudes” toward home ownership.
Mortgage debt growth has also fallen because lenders have tightened their credit standards. Urban’s researchers found that their measure of how many mortgages were likely to default was at half of its 2001-2003 levels.
Given that buying and selling of homes has slowed over the past decade, most existing mortgages are further along in their payment process. This means that existing homeowners are largely paying down principal, rather than interest.