Auto Loans and Mortgages for Younger Households

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Homeownership continues to be a primary driver of household wealth, according to the 2019 Survey of Consumer Finances (SCF). Though homeownership rates increase with age, young households, those under the age of 35, experienced the largest gains for homeownership in 2019. Additionally, the share of young households with home mortgage debt and auto loans increased, while share with education loans declined.

Though the primary residence was the largest asset category on the balance sheets of households, vehicles1 were the most commonly held type of non-financial asset and they accounted for the largest share of installment loans2. The ownership rate of vehicles for all households has remained steady between 85% and 87% since 2001.

A previous analysis showed younger households are more likely to have auto loans than mortgages, reflecting the relative ease of obtaining auto debt relative to mortgage debt. In 2019, the share of young households (under the age of 35) with auto loans rose to the highest level since 2010. While the incidence of auto loan debt among younger households has returned to more normal levels in 2019, the share of younger households with home mortgage debt remained low.

The share of all households with home mortgage debt (42%) exceeded the percentage of households with auto loan debt (37%), and this difference held true for age groups 35 and above; However, the share of all households with home mortgage debt remained virtually unchanged at 42% from 2016 to 2019, while the share of all households with auto loans increased from 34% to 37%.

As shown above, the share of young households with auto loans typically exceeded the share with home mortgage debt except for the year 2010. But mortgage debt is not a perfect indicator of homeownership as some households own free and clear of a mortgage, and in fact, the homeownership rate for age under 35 did not see a significant decline between 2010 and 2013.

Since 2010, the share of households under the age of 35 with auto loan debt has steadily increased. Meanwhile, the incidence of home mortgage debt saw a recovery from a declining trend, though it still stayed at its low level. On the other hand, the auto ownership rate for young households stayed near a normalized level (82%), while the homeownership rate saw the first increase since 2004.

Note:

1Vehicles include cars, vans, sport utility vehicles (SUV), trucks, motor homes, recreational vehicles, motorcycles, boats, airplanes, and helicopters.

2 Installment loan refers to loans that typically have fixed payments and a fixed term. The most common examples are education loans, automobile loans, and loans for furniture, appliances, and other durable goods.



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