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The Growing Concern of Mortgage Debt for Millennials

Experian reports [1] that millennial (those between the ages of 23-38) are on pace to hold more average mortgage debt. 

Millennials currently have the second-highest average mortgage balance of any generation, as the average amount owed in Q1 2019 was $222,221—a 5% annual increase. 

Those in Generation X (those between the ages of 39-54) held the highest average balance for the quarter at $237,753. 

Millennials in the Washington D.C. carry the largest amount of mortgage balance at $450,985 in Q1 2019, which is more than double the national average. Washington D.C. was also among the top-10 states where millennials have the highest credit score, with the average being 698. Average credit score across all generations is 703. 

Puerto Rico has the lowest mortgage balance among millennials with an average of $121,059 in Q1 2019. West Virginia was a close second, as millennials carried a mortgage balance of $138,554. Both markets, however, were on the lower end of the credit score scale, as West Virginia had an average credit score of 640 and Puerto Rico’s was 657. 

Debt was the focus of a report by J.P. Morgan Chase [2], which found climbing student debt is affecting housing for many prospective buyers. Student debt is doubled over the past decade to $1.5 trillion in 2018 and impacts 45 million borrowers. 

Among the findings by J.P. Morgan Chase was that the average family pays a median of $179 per month in loans of take-home income in months with positive payments. Nearly a quarter of families spend more than 11% of their income on student loans. 

While noting younger borrowers, those between 18 and 24-years-old, collectively have the most student debt, it is those within lower-income families that have the most trouble making consistent payments. 

The study revealed that 44% of homebuyers who earn less than $50,000 annually make positive payments to their loan. That number increases to 52% for those earning between $50,000-$1000, and 63% for borrowers who make more than $100,000.