A new report from the Mortgage Bankers Association's (MBA) Research Institute for Housing America (RIHA) has found that just under five million U.S. households did not make their rent or mortgage payments in Q2 of 2021.
The report, “Housing-Related Financial Distress During the Pandemic,” found that 8.6% of renters (2.86 million households) missed, delayed, or made a reduced payment in June 2021, while 4.6% homeowners (2.19 million) missed their mortgage payment. In March, closing out Q1, 4.53 million households missed payments (7.2% of renters and 4.5% of mortgagors).
"Given the level of government support during the pandemic and the more recent improvements in the economy and labor market, it is quite possible that the observed levels of rental non-payments may be at or close to pre-pandemic levels," said Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. "However, the recent rise in COVID-19 cases, and elevated inflationary pressures, could slow economic growth and hiring. These potential headwinds could also impact households still facing hardships."
Since the start of the pandemic in Q2 of 2020, 6.8% of renters and 5.7% of homeowners have missed four or more payments. Missed rental payments now total $41.7 billion, and missed mortgage payments now total $76.5 billion.
"Homeowners' employment situation and ability to make their mortgage payments has meaningfully improved since the onset of the pandemic," said Edward Seiler, Executive Director for the Research Institute for Housing America, and MBA's Associate VP, Housing Economics. "Most homeowners still behind on their payments are in a mortgage forbearance plan. For those still facing hardships once their forbearance plan expires, loan modifications, payment deferrals, and loan payoffs—through either refinancing or a home sale—are all options that could prevent a foreclosure."
The MBA estimates that approximately 1.74 million U.S. homeowners are currently in forbearance plans, or 3.47% of servicers’ portfolio overall as of July 25, 2021.
Rental property owners lost as much as $7.10 billion in Q2 revenue from missed rent payments, down from $7.48 billion in Q1 of 2021. Breaking those losses down further, 11% of renters missed one payment over the 15 months of the pandemic, 4.4% missed two payments, 2.7% missed three payments, and 6.8% missed four or more payments.
Homeowners were the least likely to miss a payment since Q2 of 2020, with 85.4% of mortgagors making all their mortgage payments, 5.6% missing just one payment, 1.9% missing two payments, 1.4% missing three payments, and 5.7% missing four or more payments. In aggregate, total missed mortgage payments were estimated to be approximately $10.8 billion for Q2 ($12.2 billion for Q1).