Many Regret Taking on a Mortgage During Pandemic

A new study broke down some of the ways the pandemic is effecting homeowners with a mortgage. The results revealed that more than half of those who took out a mortgage during the pandemic regret it. A quarter of homeowners have refinanced and about half have entered forbearance agreements. Here is what else researchers discovered:

COVID-19 has led to the closings of endless businesses, a rise in unemployment, and an economic recession, however, this era also is associated with an unseasonably hot housing market with mortgage interest rates at record lows.  

“Homebuyers have come out in droves,” according to a recent LendEDU blog post.  

The article cites the Mortgage Bankers Association numbers: Mortgage refinances are up 84% year-over-year, while mortgage applications have increased 22% compared to last year.  

LendEDU dove into this unexpected trend by surveying 1,000 adult American homeowners that currently have an outstanding mortgage through a private lender. 

“Among many interesting trends, we found that new homeowners are regretting their decision to buy a house during the pandemic, while 26% have refinanced their mortgage during the pandemic, and 54% have seen incorrect negative credit marks for something like a missed payment despite agreeing to temporary forbearance,” reported LendEDU’s data journalist Mike Brown.  

“94% of our respondents became homeowners with the help of a mortgage before the coronavirus pandemic began impacting the U.S. (before March 2020), while 6% became homeowners with the help of a mortgage during the pandemic (March 2020 to now). 

Amongst the latter, a combined 72% cited the coronavirus pandemic as the reason they decided to take out a mortgage to become homeowners, with many specifically attributing the current low-interest-rate lending environment.” 

LendEDU charted and broke down respondents’ answers to questions including: 

• Did the coronavirus pandemic play any role in you becoming a homeowner with the help of a mortgage? (72% yes.) 
• Do you regret becoming a homeowner during the coronavirus pandemic? (55% yes.) 
• Did you receive a lower interest rate after refinancing your mortgage during the pandemic? (90% yes.) 
• Have you struggled to repay your mortgage each month since the start of the coronavirus pandemic? (41%, of all respondents, yes.) 
• Since the start of the coronavirus pandemic, have you entered into any type of pandemic forbearance or reduced monthly minimum payment agreement with your mortgage lender? (32%, of all respondents, yes.) 
• How much longer is the pandemic forbearance or reduced minimum payment agreement going to last according to your mortgage lender? (30 days, 22%; 31-90 days, 30%; 61-90 days, 27%; 91 days or more, 14%; didn’t answer, 6%) and 
• Since entering into pandemic forbearance or a reduced monthly minimum payment agreement with your mortgage lender, have you seen any negative marks on your credit report for something like a missed or insufficient payment despite this agreement? (54%, yes).  

 

Click here for the full survey results.