It’s no secret that the housing market has been hot during much of the coronavirus pandemic due to record-low mortgage interest rates, an increased need for a space and the huge millennial generation hitting milestones that typically encourage homeownership. But could some of these new homeowners be pulling the trigger too soon when there’s no end in sight to the upheaval wrought by COVID-19? Many seem to think so, according to a new survey from financial information site and marketplace LendEDU.
LendEDU commissioned the survey of 1,000 U.S. adults with a mortgage from survey platform Pollfish. Pollfish conducted the survey online on August 21, 2020. Among survey respondents, 94 percent became homeowners before March 2020 when the pandemic started making an impact in the U.S. The remaining 6 percent became homeowners with a mortgage during the pandemic, in March or later. Among this latter, limited group of 60 or so respondents, 72 percent said the pandemic played a role in them becoming a homeowner with the help of a mortgage — largely due to low mortgage rates.
But it turns out that the pandemic giveth and the pandemic taketh away. Among this same group, 55 percent of respondents said they regretted becoming a homeowner during the pandemic. Financial reasons were the top source of their regret (30 percent), followed by “social/life reasons” (10 percent), lack of preparation for homeownership (7 percent) and “other” (8 percent). Monthly mortgage payments average $1,030 nationwide, LendEDU said, citing LendingTree data.
Just under half of these new homeowners (46 percent) said they were struggling to repay their mortgage each month during the pandemic with 23 percent saying they or their co-borrower had lost their job and 18 percent saying the pandemic-induced recession was the cause of their financial struggles. Among pre-coronavirus homeowners, 40 percent said they were struggling to repay their mortgage each month (20 percent because of the recession, 16 percent because of job loss and 4 percent “other”).
The same share of new homeowners who said they were struggling to repay their mortgage said they had entered into some kind of forbearance agreement with their lender: 46 percent. Among pre-coronavirus homeowners, that figure was 30 percent.
For 22 percent of respondents that have entered into a forbearance agreement, that agreement runs out within the next 30 days. For 30 percent of those respondents, the agreement ends in the next 31 to 60 days, and for 27 percent, it runs out in the next 61 to 90 days.
Of those that had entered into a forbearance agreement, 54 percent said they had nonetheless seen their credit score improperly dinged due to a missed or insufficient payment.
“While this is never a welcomed experience, we did find that 60 percent of respondents have already resolved the credit dispute, while 10 percent are currently in contact with either their mortgage lender or credit bureau to resolve the issue. 29 percent indicated nothing has been resolved yet,” LendEDU’s report said.
Just over a quarter of overall respondents, 26 percent, said they had refinanced their mortgage during the pandemic (41 percent of new homeowners and 25 percent of pre-coronavirus homeowners) and 90 percent of respondents were able to receive a lower interest rate after the refinance. For those that hadn’t refinanced, the top reason was that they had never considered it (44 percent), followed by wanting to keep building credit (23 percent).