NEW YORK – May 19, 2015 – Young buyers aren't being held back from obtaining a mortgage due to their student loan debt, according to a new report released from TransUnion.
Consumers between the ages of 18 and 29 with a student loan in repayment are "generally able" to qualify for new loans. Not only that, the study finds that those loans tend to perform as well or better than new loans to similarly aged consumers without student loans.
For its analysis, TransUnion researchers studied borrowers with student loans who entered repayment from three different timeframes: the fourth quarter of 2005, fourth quarter of 2009 and fourth quarter of 2012.
The report finds that student loan consumers in their 20s pass similarly aged consumers without a student loan after making payments for only three to six years. Student loans often have decades-long payoff periods. The study included mortgage loans but also auto loans and credit cards.
"Going to school impacts young consumers' access to credit; while in school, students may be less likely to have a job and generate the income necessary for loan approval," says Steve Chaouki, executive vice president and head of TransUnion's financial services business unit. "However, most catch up once they leave school – and their ability to catch up has not changed over the past decade. Our study demonstrates that consumers in their 20s with student loans in repayment – that is, once they finish school – are in fact able to access credit at levels similar to or better than their peers who do not have student loans."
The study found that the changing economy between 2005 and 2012 impacted young consumers' access to credit, and the percentage of consumers aged 18-29 with mortgages, credit cards or auto loans dropped significantly. But the study showed that the drop impacted consumers without student loans, as well as those with student loans.
"This is an especially important finding, because it shows the dramatic rise in student loan balances has not materially impacted young consumers in gaining access to mortgages, auto loans or credit cards, or in their ability to successfully manage their new credit obligations," says Charlie Wise, co-author of the study and vice president in TransUnion's Innovative Solutions Group.
Source: "TransUnion: Student Loans Do Not Impact Housing," HousingWire (May 13, 2015)
