A shift in the financial profile of the U.S. population over the past decade has mortgage debt making up a bigger share of liabilities for older Americans and a smaller share for millennials.
As of 2014, home loans accounted for 76.3 percent of all debt held by consumers who were at least 60 years old.
That’s a bigger share for the group than in 2005, when residential loans accounted for just 71.5 percent of their debt.
TransUnion reported the findings Wednesday based on a sample of approximately 10 million consumers from its credit database as of March 31.
TransUnion Vice President Charlie Wise, who co-authored the study, noted that proceeds from rising senior borrowings might be being used for spending on themselves or on family members who need financial help.
“At the same time, rising debt levels by older consumers could lead to increased default rates if they are unable to meet higher loan payments with their often fixed incomes,” Wise said. “This development certainly bears watching over the next several years.”
Home-equity lines of credit account for 7.2 percent of debt owed by the 60-plus group, up from 5.7 percent in 2005.
But for people between 20 and 29, mortgages accounted for just 42.9 percent of their overall debt this year, sinking from 63.2 percent in 2005.
HELOC share for the millennial category was only 0.2 percent, off from 2.1 percent in the previous period.
Student loans are apparently sucking up borrowing ability from millennials.
“Our study clearly shows that the rapid rise in student loan debt for younger consumers has occurred while the shares of all other loan types except auto has dropped, indicating that student loans may be crowding out most other loan types,” Wise explained. “Additionally, younger consumers have found during and soon after the recession that it is more difficult to gain access to credit cards and mortgages, further pushing the decline in those balances.”
Student debt accounted for a staggering 36.8 percent of millennial debt this year, soaring from a 12.9 percent share in 2005.
TransUnion additionally reported that prime mortgage borrowers accounted for nearly a third of al 60-plus mortgage borrowers this year, surging from 27 percent in 2009. All other age groups saw a decline in the share of prime borrowers.
“Older consumers have been able to access higher borrowing levels in large part because the 60-plus age tier has the strongest risk profile of any of the age groups,” the report stated.
