Over the same period, the number of older adults with mortgages has risen as the US population has aged. In 1998, about 728,000 homeowners ages 65 and older had a mortgage; by 2022, nearly 2 million did.
Moreover, the median amount of mortgage debt has also increased significantly. For homeowners ages 75 and older, median mortgage debt rose sharply to $106,800 in 2022, up from $66,369 in 1998—a 61 percent increase, after adjusting for inflation. This increase is substantive in dollar terms because mortgage debt is the largest type of debt homeowners carry, making up 99.4 percent of all debt for homeowners ages 75 and older. All age groups have experienced rising mortgage debt as home price increases have outpaced inflation, but homeowners ages 65 and older have been particularly affected.
The low interest rates during the COVID-19 pandemic gave borrowers the opportunity to refinance and lower their mortgage payments. Even so, the share of cost-burdened homeowners with a mortgage is up slightly from 2019. According to the 2022 American Community Survey, 40 percent of homeowners ages 62 and older with a mortgage were cost burdened, compared with 24 percent of homeowners younger than 62 with a mortgage.
Access to home equity is critical to the financial stability of older homeowners, especially homeowners of color
As cost burdens rise, it becomes increasingly crucial for older homeowners to be able to access their home equity. Older homeowners accumulated substantial home equity in recent years as home prices rose rapidly during the pandemic. For cost-burdened homeowners ages 62 and older, median home equity (adjusted for inflation) increased from $173,000 in 2019 to $222,000 in 2022.
Having the ability to tap into home equity is particularly important for older homeowners of color, who are more likely to be cost burdened and less likely to have sufficient liquid assets to cover a financial shock. According to the 2022 SCF, the median liquid assets of Black and Latine homeowners ages 62 and older were $3,580 and $6,200, respectively, while white homeowners held $16,270. In addition, 46 percent of older Black homeowners and 47 percent of older Latine homeowners are cost burdened, compared with 38 percent of older white homeowners.
Expanding access to tools for extracting equity would also benefit older homeowners of color because they hold most of their wealth in their homes. Among homeowners ages 62 and older, home equity composed 81 percent of total net worth for Black homeowners and 89 percent for Latine homeowners, compared with 47 percent for white homeowners in 2022.
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