Fewer than 5 million households failed to make their rent or mortgage payments in March 2021, an improvement from December 2020 and the lowest number since the onset of the COVID-19 pandemic, according to a first quarter 2021 report released by the Mortgage Bankers Association.
The study, which surveyed over 8,000 households and was dubbed “Housing–Related Financial Distress During the Pandemic,” found that 7.7% of renters (2.56 million households) missed, delayed, or made a reduced payment in March 2021, while 4.9% of homeowners (2.33 million) missed their mortgage payment. Twenty-six million student debt borrowers (41.4%) missed payments.
The numbers are still high, but the improvement seen from December is encouraging, said Gary Engelhardt, professor of economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University and MBA contributor.
“The rapidly improving economy and labor market, increased vaccination rates, and promising trend of declining COVID-19 cases all bode well for those who are still facing unemployment or underemployment because of the pandemic,” Engelhardt said. “And the economic forecast is brightening heading into the summer. Getting closer to consistent, pre-pandemic levels of economic activity and employment will allow households the ability to resume their housing and student debt payments and pay back past-due amounts.”
The slowly improving numbers could also be attributed to the rollout of a second stimulus bill in December that included $25 billion in dedicated rental assistance, $600 in direct stimulus checks, $300 per week in enhanced unemployment benefits through March and an extension of the CDC eviction moratorium to January 31, 2021.
In all, MBA found that 23.7% of renters and 14.2% of homeowners missed at least one mortgage payment during the pandemic, but only 8.6% of renters and 6.8% of homeowners missed more than two payments. Roughly 37% of student debt borrowers missed more than two payments.
Some landlords continued to work with their tenants; a reported 9.8% of renters received permission to delay or reduce their monthly payments during the first quarter 2021. A total of $7.85 billion was lost in rental payments in the first quarter, up from $7.41 billion in the fourth quarter 2020. And in the past year, the total of missed rental payments equaled about $35 billion.
The study also found that 2.3 million renters feel they are at risk of eviction or being forced to move in the next 30 days, and 1.2 million homeowners feel they are at risk of foreclosure or being forced to move in the next 30 days.
“Millions of families are still facing economic distress, despite improving conditions since last March,” Engelhardt said.
Homeowners were the least likely of the three groups to miss a payment over the past four quarters, as the study found that 85.8% of homeowners made all of their mortgage payments and only 5.6% missed a payment. 1.8% of homeowners missed two payments, 1.4% missed three payments, and 5.4% missed four or more payments.
In all, total missed mortgage payments were estimated at approximately $13.2 billion for the first quarter of 2021 — down from $14.5 billion for the fourth quarter of 2020. Over the first year of the pandemic, aggregate missed mortgage payments reached almost $68 billion, the report noted.
Distribution of unemployment benefits have slowed gradually since September 2020, when more than 7% of renters studied were receiving them, to just over 6% of those studied in the first two weeks of April 2021. Approximately 7% of homeowners are receiving unemployment benefits as of the beginning of April 2021.
“The expected acceleration in hiring and economic growth during the rest of the year should help most affected households resume their housing and student debt payments before expanded unemployment benefits expire at the end of September,” said Edward Seiler, MBA associate vice president of housing economics.