A Startling Revelation
Financial experts revealed that this "alarming" surge is particularly common among clients in their thirties. However, one intervention that has proven to help reduce financial stress is financial counseling.
MMI found that housing default counseling clients in 2023 are burdened with an average unsecured debt of 12% higher than clients in 2022, rising to a concerning 24% increase for clients in their thirties. Furthermore, clients in 2023 are grappling with an average non-mortgage-secured debt that is 10% higher than in 2022.
As the economy—some unwillingly—adjusts to post-pandemic realities, the support programs that once buoyed homeowners, such as COVID forbearances and the Homeowners’ Assistance Fund, have mostly come to an end. Consequently, consumers facing mortgage payment challenges today have fewer lifelines compared to previous years.
The report also showed that the impact of rising interest rates is further exacerbating the situation. Previously, once-manageable levels of unsecured debt have suddenly become unmanageable for many consumers, affecting their overall financial budgets, including their ability to meet mortgage obligations.
"The thirties are a pivotal financial decade for most individuals, often marked by the responsibilities of parenthood, including expenses such as daycare, tutoring, sports, and clubs, which have all surged in cost since the pandemic," said Kate Bulger, VP at MMI. "This is also the decade when many of us make our first home purchase. However, between January 2019 and December 2022, the median home price rose by almost 52%. The disproportionate increase in home prices compared to income levels places added pressure on the budgets of those in their thirties, especially when unexpected setbacks occur. Additionally, this demographic carries the highest student loan debt burden, with an average balance of around $42,000, further straining their finances as student loan payments resume."
Notably, these trends are contributing to significantly higher levels of financial stress overall. Since 2020, the percentage of individuals reporting high or very high levels of financial stress has risen by nearly 20% (18%).
“We remain committed to helping our clients navigate their financial difficulties, offering solutions, and easing the burden of financial stress during these challenging times," Bulger concluded.
To read the full release, including more data, click here.