Almost a quarter of renters and buyers with debt were denied a mortgage or rental deal
Roughly a quarter of renters and homebuyers carrying personal debt were denied either a rental agreement or a mortgage, according to data from Zillow’s annual group report on Consumer Housing Trends.
The report found that medical debt had the most impact on homebuyers’ budgets and whether or not they would qualify for a mortgage. Most aspiring buyers said medical debt (38%) was the reason for a mortgage or rental denial, while others pointed to their student loan (28%) and credit card (22%) debts.
Meanwhile, 39% of renters cited medical debt as the reason why they were denied a mortgage or rental agreement. Twenty-four percent pointed to their student loans, while 26% said it was because of their credit card debt.
"When we focus on low unemployment and the strong economy, we often forget that in many ways the rising costs of life can erode most of those gains," said Skylar Olsen, director of economic research at Zillow. "Health care has never been more expensive. Getting a college degree, a path more likely to lead to economic success for those able to get through it, has never been more expensive. US housing values and rents have never been more expensive. While incomes, both at the high and low end, are growing, the pace hasn't kept up with those crucial life expenses. That's fact and Americans are feeling it."
The report revealed that more than two-thirds of renters carry debt, and almost two-thirds could not afford an unforeseen $1,000 expense due to their medical debt.
To afford their home, 68% of buyers said they made at least one lifestyle change like reducing spending on entertainment, picking up additional work, cutting back on vacation, or decreasing their spending on technology. The report also showed that 44% of homeowners with medical debt couldn’t cover an unforeseen $1,000 expense.
