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Report Finds Mortgage Holders Have Highest Non-Mortgage Debt in Ten Years

debtsU.S. mortgage holders possess the highest levels of non-mortgage related debt in over ten years, according to Black Knight Financial Services' (BKFS) June 2015 Mortgage Monitor report. Mortgage related debt includes auto debt, student loan debt, and credit card debt.

BKFS used loan level data from McDash mortgage performance database with Equifax ABS CRI Servicing data via the McDash Credit Module, to examine U.S. mortgage holders’ levels of non-mortgage related debt.

The June report found that Americans with mortgages possess $1,400 more non-mortgage related debt on average compared to last year, and almost $2,600 more than in 2011. In 2015, the total amount of non-mortgage debt reached $24,825 compared to $23,412 in 2014. In 2006, that number was at $22, 817.

"Non-mortgage debt is a key component of home affordability–the more total debt and the higher monthly non-mortgage payments borrowers have, the less money is available to put toward a new home purchase, to qualify for refinancing or, potentially, to meet current mortgage obligations," the report said.

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Automobile debt accounted for the largest portion of non-mortgage debt, making up 81 percent of overall non-mortgage debt increase in the last four years, according to the report. Auto debt makes up $2,094 of the nearly $2,600 increase in overall non-mortgage related debt since 2011.

Black Knight found that student loan debt among mortgage holders reached an all time high with 15 percent of mortgage holders carrying student loan debt, with average balances of nearly $35,000. Meanwhile, credit card balances of mortgage holders remain near post crisis lows, down from more than 86 percent in 2006 to below 83 percent today.

The report determined that borrowers with FHA/VA loans hold the highest levels of non-mortgage related debt among the four loan groups: FHA/VA, Portfolio, Private, and GSE. At the same time, FHA/VA has the lowest original loan amounts.

FHA borrowers carry the highest student loan and auto debt amounts, as well as highest total non-mortgage related debt, but carry the least credit card debt on average. On the other hand, GSE borrowers carry 24 percent lower overall non-mortgage debt than FHA loans, the lowest non-mortgage debt level of investor category.

BKFS said that a clear connection can be seen between non-mortgage debt, mortgage inquires, and prepayments. Borrowers with a recent mortgage inquiry on their credit report carry nearly 40 percent or $10,000 more debt on average than borrowers without. Meanwhile, borrowers with a recent mortgage inquiry on their credit report, those who paid their loan in full in the month of observation carried $4,000 less non-mortgage related debt than those who did not.

Click here to view Black Knight Financial Services June 2015 Mortgage Monitor report. 

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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