Retiree baby boomers more likely to carry housing debt

Fannie Mae said data suggests a need for consumer outreach and education aimed at older borrowers

Retiree baby boomers more likely to carry housing debt
The oldest baby boomers who are approaching retirement age are less likely to have paid off their mortgages compared to the predecessor generation, according to a Housing Insights report released by Fannie Mae.

Fannie Mae found that among owner-occupant baby boomers who have already passed traditional retirement age (aged 65 to 69 in 2015), less than 50% were mortgage-free, down 10 percentage points compared with the earlier generation of homeowners who were the same age in 2000.

Meanwhile, free-and-clear homeownership was more favorable for younger boomers in 2015 compared with predecessors. The report found that 26% of boomers aged 50 to 54 in 2015 owned their homes outright, more than the 22% of homeowners who were the same age in 2000.

Boomers achieved free-and-clear homeownership at an accelerated pace during the economic recovery, according to the report. A cohort analysis revealed that among the cohort of boomer homeowners that aged from 60 to 64 in 2010 to 65 to 69 in 2015, the proportion who owned their homes free and clear increased by 10.6 percentage points. This increase was more than two percentage points larger than the gain experienced by the pre-boomer cohort that passed through the same age range between 2005 and 2010.

Fannie Mae said the increased prevalence of housing debt among older homeowners raises concerns that this could compromise financial security in retirement by expanding housing affordability problems, crimp essential nonhousing spending, increase vulnerability to home loss through foreclosure, or limit the accumulation of housing wealth.

The report data suggests that there is a need to expand consumer outreach and education to target older mortgagors, Fannie Mae said. Additionally, Fannie Mae suggested that informing younger boomers about shorter-duration mortgage options may also help more boomers enter retirement with little or no housing debt.

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