Mortgage-free America! Share of US homes owned outright rises to an all-time high thanks to ageing boomers paying off their record-low deals
- The number of mortgage-free homes increased by 8 million between 2012 and 2022
- Americans who bought homes decades ago are paying off their mortgages
- A third of owner-occupied homes in 2022 were owned by people over 65
The share of American homes that are directly owned has risen by 5 percent in a decade to a record high.
Last year, nearly 40 percent of Americans owned their own home, but a decade earlier, in 2013, that number was just 34 percent, according to U.S. Census Bureau data cited by Bloomberg.
The trend is driven by an aging population that has had relatively low mortgage rates and has had options to refinance them as they get older, the outlet reported.
Over the past three decades, mortgage rates have gradually fallen from about 10 percent in the early 1990s to about 3 percent before the pandemic.
Between 2013 and 2022, the percentage of Americans with full ownership of their home will increase by about 5 percent
The number of mortgage-free single-family homes increased by 7.9 million between 2012 and 2022
As they continued to decline, the ability to refinance loans made monthly payments cheaper and allowed homeowners to take out increasingly shorter-term loans that they could pay off sooner.
And between the early 1990s and around 2020, the average sales price of a home in the U.S. nearly tripled, according to Census Bureau data.
The higher valuation of homes also improved the ability to obtain favorable new loans.
The number of mortgage-free single-family homes increased by 7.9 million to 33.3 million between 2012 and 2022, according to Census Bureau data analyzed by Bloomberg.
And of the 84.6 million owner-occupied homes in 2022, almost 33 percent were owned by people over 65.
That was an increase of 4.6 percent, or 2.8 million, compared to ten years earlier.
Of the 84.6 million owner-occupied homes in 2022, almost 33 percent were owned by people over 65
It comes at a time when younger Americans are facing one of the least affordable housing markets in recent memory, thanks to rising mortgage rates and higher home prices.
According to government-backed lender Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage currently hovers around 7.5 percent.
In real terms, this means homeowners will have to pay more than $1,000 extra per month if they buy a home today, compared to two years ago.
Someone who bought a $400,000 home in October 2021 — when interest rates were 3.09 percent — would pay $1,621 per month on their mortgage, assuming they made a 5 percent down payment.
But at current rates, the same owner would have to pay $2,657.