A new survey from Bankrate found that 77% of homeowners said their mortgage negatively impacts their ability to save money for retirement.
This also includes 31% who say their mortgage has a “major negative” impact on their ability to save and 46% who said it has a “minor negative.”
Twenty-three percent of respondents said their mortgage has no negative impact on their ability to save money.
“Big mortgage payments take a bite out of your monthly income but are also a major obstacle to saving for retirement, emergencies, or other financial goals,” said Greg McBride, CFA, Bankrate Chief Financial Analyst.
McBride added that homebuyers are “biting off more than you can comfortably chew” and making it difficult to save.
Bankrate states that 39% of homeowners have more equity in their homes than money in retirement accounts. Just 28% of respondents say their retirement account balances exceed their home equity. Twelve-percent said their home equity is equal to their retirement account balances.
Younger homeowners are impacted the most, as 78% of respondents between the ages of 24-39 reported a negative impact and 82% of those aged 40-55 said mortgages impacted savings.
Relief may soon be on the way, though, as CoreLogic previously reported that the average mortgage payment fell 6.8% in December 2019 due to a 20% decline in mortgage rates. It was the eighth consecutive monthly mortgage payments have dropped year-over-year.
Mortgage rates have fallen from 4.64% in December 2018 to 3.72% in December 2019.
CoreLogic’s Home Price Index (HPI) and HPI Forecast predicts home prices will rise in 2020 by an average of 4.6%. Mortgage payments are expected to increase just 2.7% during the year as rates are predicted to be 0.2 percentage points lower than the year prior.
The average mortgage payment in December 2019 was 35.8% below the all-time high of June 2006’s $1,298. The mortgage rate in June 2006 was 6.7% and the average sales price was $197,000.
The Mortgage Bankers Association reported that mortgage applications for the week ending on March 6 rose 55.4% and is now forecasting mortgage originations to come in around $2.61 trillion in 2020.