Currently, more than 30 million homeowners do not have a mortgage. Here’s why it’s a big warning sign for the housing market
A typical American dream is to become a homeowner. For generations, it has been seen as a symbol of economic security and a beacon for building wealth.
but, Mortgage fees and Home prices It has remained rising over the past few years, and it has prevented many homeowners from entering the housing market. The number of first-time home buyers in the US is terrible: In 2004, the number of first-time home buyers was nearly 3.2 million. luck on tuesday. By 2024, that number had plummeted to just 1.14 million.
The obstacle to buying a home is essentially a chicken and egg situation. Older generations who bought their homes decades ago – and are usually ready to shrink by now –I’m not upset Due to fears of a relatively high mortgage rate. The mortgage rate was below 3% during the pandemic; Peak at 8% In October 2023, it is currently hovering nearly 7%. And because that supply is not on the market, home prices are high and the younger generations are unable to buy a home.
Plus, many Americans own their homes entirely. That means there are no mortgage payments. That’s good news for them. With that unlikely, mortgage rates always drop, but this is disastrous news for those looking to break into the housing market.
According to a Goldman Sachs memo issued Tuesday, the share of homeowners who have not received mortgage payments rose to 40% in 2023, up from 33% in 2010.
Meanwhile, the housing market is particularly vulnerable to recently purchased homeowners.
“We see early signs of risk building within certain markets and within certain borrowers populations. statement.
People don’t rent it to their home because the prices are too high.
Meanwhile, US mortgage borrowers can tap $11.5 trillion Home Equity According to the property ICE Home Loan Technology. However, according to Goldman Sachs, their preference to harness their equity is lower than between 2001 and 2008, as borrowers’ demand for expensive and risky debt appears to have changed between 2001 and 2008.
“In fact, borrowers have focused on paying off their mortgages and fully owning their homes,” writes Arun Manohar, an analyst at Goldman Sachs. That’s because borrowers hate risky debt products (people with high interest rates) like Housing Stock Credit Lines (HELOCs).
Manohar did not respond luckRequest additional comment.
Repord, which was reported by ICE, used only 0.41% of the tapable stock available in the first quarter of 2025. This was less than half of the typical withdrawal rate observed between 2009 and 2021. ICE’s June 2025 Home Loan Monitor Report.
“The stock level has remained historically high and we now see a meaningful decline in borrowing costs for that stock,” Andy Walden, head of mortgage and housing market research at ICE, said in a statement. “If the Fed moves forward with expected interest rate cuts, borrowing for home equity could become even more attractive later in the year.”
The bottom row is that more people are either buying their homes entirely or not paying for their mortgages for fear of high home prices and mortgage rates, but the silver lining is that they are building more wealth and debt by avoiding home equity.
“The continuous pace of mortgage extraction may be due to factors such as rising mortgage rates, stricter underwriting standards, lower mortgage lending by banks, and more conservative borrowing behavior,” writes Manohar.