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The housing market is about to take a hit as student loan payments restart

Jennifer Sor   

The housing market is about to take a hit as student loan payments restart
  • The restart of student loan payments is about to hit the housing market.
  • 58% of economists polled in a recent survey say the resumption of payments will have a significant impact on mortgage affordability.

The affordability crisis battering US housing market could get even worse as student loan payments restart this fall, according to a recent survey of over 100 housing experts.

58% of polled experts believe that the resumption of student loan payments could have a significant impact on mortgage affordability, according to a recent analysis conducted by Pulsenomics. 35% of experts believed the resumption of payments could significantly hit the US homeownership rate, and 26% believed it could significantly impact the mortgage delinquency rate, the research firm added.

Student loan payments will kick back in at a time when housing affordability is already strained. The US homeownership rate slipped to which slipped to 65.9% over the second quarter, Fed data shows, while delinquencies at 30 large mortgage servicers rose to 3.16%, according to an analysis from Inside Mortgage Finance.

The effects of the student loan payment restart may be felt for years to come, too. 38% of experts said the impact on mortgage affordability could last for up to two years, while 43% of respondents believed it could last for three or more years.

Student loan payments are set to resume on October 1, ending a three-year payment pause that began during the pandemic. Economists have warned that could weigh heavily on economy, and on housing in particular. Around 70% of student loan borrowers are between the ages of 25-49, according to US Department of Education data, meaning they're around their prime homebuying years.

The average borrower, meanwhile, has an debt balance of $38,000. That makes the average student loan payment around $502 a month, according to an estimate from the Education Data Initiative, or around 20% of the estimated median US monthly mortgage payment of $2,605.

In a separate survey conducted by Morgan Stanley, only 29% of borrowers said they were confident they would be able to make their student loan payments, while 34% said they would be unable to make payments at all.

Additionally, 31% of respondents said they were worried about making debt payments and 27% said they were worried about making rent or mortgage payments, with both measures notching an all-time-high.

Affordability conditions in the US housing market are already the worst buyers have seen in decades. That's largely due to high mortgage rates and a dearth of available housing supply, which has kept home prices elevated over the past year even as demand has fallen.


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