A new survey highlights how many homeowners are dealing with credit card debt — and how that impacts their ability to pay their mortgage,
About the Survey Findings:
Recently, the mortgage lender and servicer Newrez released a report looking at the finances of homeowners. The survey was conducted by Morning Consult and included more than 2,000 adults in the United States.
First, the survey found that 51% of homeowners surveyed carry a credit card balance month to month. Of those, 84% said that they’d feel “significant relief” if those credit card balances were removed. Similarly, 61% stated that their credit card debt was slowing down their progress toward other financial goals, while 59% agreed that the debt was negatively impacting their financial situation overall.
Many of the homeowners who admitted to having credit card debt also said that they’ve cut back spending in certain areas. In fact, 71% of that subset stated that they’ve made adjustments to their spending in the past year. The most impacted spending category was travel and leisure, which 41% of homeowners with credit card debt said they trimmed back on. That was followed by everyday expenses such as groceries (37%) and home improvements (33%). Unfortunately, many respondents also reported putting off savings instead, including 36% who reduced emergency fund contributions and 19% who trimmed retirement savings.
Although owning a home while managing credit card debt may be a challenge, the vast majority of respondents still felt positively about owning, with 89% saying that owning a home offered them a sense of stability and 84% citing owning as “one of the best ways to build wealth.” In turn, 9 out of 10 homeowners carrying credit card debt reported prioritizing their mortgage payments over other bills. Additionally, 89% expressed confidence that they could keep up with their mortgage payments.
Finally, homeowners were asked about what financial products they thought might be effective in helping them manage their credit card debt. At the top of the list were personal loans and home equity loans, which 71% of respondents said were effective debt consolidation options. That was followed by home equity lines of credit (69%), balance transfer credit card offers (62%), and cash-out refinancing for mortgages (61%).
What They’re Saying:
Commenting on the survey’s results, Newrez Chief Commercial Officer Leslie Gillin said, “Homeowners are carrying a heavy financial load right now, but their belief in homeownership hasn’t wavered. Even with credit card debt weighing on them, they’re focused on protecting their home and taking steps to improve their financial outlook.”
My Thoughts:
While I think it’s worth looking at these types of surveys, it’s also important to explore why a certain company may have commissioned the report in the first place. In the case of Newrez, they use these results to highlight the ways that some of their products —such as home equity loans and HELOCs — may be able to assist homeowners. With that context, you can see why the company would want to discuss those who both own homes and are carrying other types of debt.
Nevertheless, I do think it’s interesting to see how different homeowners manage their finances. And it’s true that, in some situations, home equity loans and HELOCs may be a good option for those looking to pay down higher-interest debt. However, I’d recommend that those curious about these products speak with an unbiased professional who can help them navigate the pros and cons associated with each option.
