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Elderly Tend to Pay Off Mortgages, 2001 Survey Finds
Nearly four out of every 10 residential properties in the U.S. were owned free and clear in 2001, according to a report recently released by the Department of Housing and Urban Development and the Census Bureau.
Conducted every decade since the 1950 Census, the “Residential Finance Survey” uniquely covers all residential properties, including those that are vacant, and all sources of mortgage financing, using information from both property owners and the holders of mortgages or installment loans.
The study found that home owners tend to pay off their mortgages as they mature and that most go into retirement without owing on their mortgage.
The survey found that the typical mortgage was fixed-rate, although new “hybrid” mortgages, which have recently become a significant factor in the housing market, particularly in high-priced areas, were already on the rise in 2001.
Among the results of the survey:
- There were an estimated 83,465,000 residential properties in 2001: 67,671,000 of these were owner-occupied or home owner properties and 15,794,000 were rental, or vacant. This represented overall growth of 17.7% from 1991 to 2001, with the growth rate of ownership units (20.7%) outdistancing the growth of rental units (6.4%).
- About 64% of all home owner properties had a first mortgage in 2001, and the proportion of properties with these mortgages declined as the owners aged. Only 29.3% of owners aged 65 to 74 and 10.8% of those 75 and over had mortgages on single-family detached homes, compared to 95.1% of 25- to 34-year-old owners; 90.4%, age 35 to 44; 79.8%, 45 to 54; and 57.7%, 55 to 64. Older condominium owners were significantly more likely to hold on to a mortgage.
- Nearly a fourth of all home owners (23.6%) had more than one mortgage, including home equity loans.
- Of first mortgages on all properties in 2001, 74.2% were fixed-rate with level payments. The share of both fixed-rate and adjustable-rate loans fell a few percentage points, as loans in the “other” category increased from 1.1% in 1991 to 8.3% in 2001. “Other” mortgage products include the various types of new “hybrid” loans such as interest-only and zero-downpayment options.
- The share of first mortgages held by the government-sponsored enterprises increased from 30.4% of all properties in 1991 to 42.4% in 2001. The share held by savings and loan institutions and federal savings banks declined during the 10-year period from 22.6% to 9.8%, while the commercial bank or trust company share remained about the same, going from 16.2% to 16.1%.
- Lenders classified 4.9% of regular first mortgages for home owner properties as subprime in 2001. Manufactured (mobile) homes financed with regular mortgages, not installment loans, were the property type with the highest percentage of subprime mortgages, at 10.0%.
- Although interest rates have declined significantly since the 2001 survey, subprime loans for single-family detached home owner properties averaged 9.56% for fixed-rate loans, compared to 8.35% for prime loans — a spread of 121 basis points.
Information and results of the “Residential Finance Survey: 2001” are available at www.huduser.org/datasets/rfs.html.
To purchase a printed copy, call 800-245-2691 or 301-763-4636.
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