Missed Housing Payments Signal Further Pressures on Paycheck-to-Paycheck Consumers 

The pressures are mounting for paycheck-to-paycheck consumers as pandemic-era pauses on some of the most significant monthly obligations are expiring.

The resumption of student loan and mortgage payments comes just as inflation takes root in a way not seen in decades.

As noted in these digital pages in past days, data show that mortgage payments seem to be going by the wayside a bit. The Mortgage Bankers Association reports that a “substantial” number of individuals are missing their housing payments. In terms of the numbers themselves, 5.3 million households missed a mortgage or rental payment in October, a surge from the 4.7 million who missed a payment in September.

Read more: Mortgage Bankers Report ‘Substantial’ Missed Payments 

The share of homeowners missing mortgage payments rose from 3.2% in September to 3.8% in October, while 10.9% of renters either missed, delayed or made a reduced rental payment in October, up from 9.6% the previous month.

Total Household Debt Creeps Higher 

The impact is likely to be significant. The Federal Reserve of New York said in its most recent quarterly report on household debt that mortgage balances shown on consumer credit reports increased by $230 billion in the third quarter of 2021 and stood at $10.67 trillion at the end of September. Total household debt rose to more than $15 trillion in the most recent period.

Drilling down a bit into mortgage delinquencies, the Fed noted that about 9,600 individuals had a new foreclosure notation added to their credit reports between July 1 and Sept. 30. “Although the hold on foreclosures due to CARES was lifted on July 31, additional federal and state policies will forestall many foreclosure starts until 2022,” the Fed stated, adding that the share of mortgage balances 90+ days past due remained at 0.5%. That’s a historic low, but will almost undoubtedly creep up in the months ahead.

The Fed also found that outstanding student loan debt stood at $1.58 trillion in the third quarter, a $14 billion rise from the second quarter. Roughly 5.3% of aggregate student debt was at least 90 days delinquent.

Those twin pressures of housing and student debt, where forbearance programs are ending, signal renewed pressures, particularly the paycheck-to-paycheck households. As PYMNTS has reported in recent weeks, the share of households that struggle to make ends meet (regardless of income level) now stands at 57%, up from about 52% earlier in the year.

Related news: Inflation, Disappearing Stimulus Payments Push Paycheck-to-Paycheck Consumer Ranks Higher 

Add in the fact that as the Fed found that U.S. credit card debt increased by $17 billion in the most recent quarter, the second straight quarterly increase – and things are pinched a bit tighter in terms of discretionary spending.

“In total, non-housing balances grew by $61 billion, with gains across all debt types,” the New York Fed noted.

Bit by bit, the pressure is mounting, and it seems likely that we’ll see delinquency rates rise among the most pressing of household expenses, with the pain felt most acutely by the paycheck-to-paycheck consumer.