Can Changing Demographics or Refinancing Behaviors Explain the Rising Levels of Housing Debt Among Older Americans?

Jonathan Spader

The share of older households with debt secured by their primary residence more than doubled between 1995 and 2016. This study uses the Survey of Consumer Finances (SCF) to examine the sources of this shift. The empirical analyses first use a series of regressions to examine the relative influence of several hypothesized demographic contributors. The results suggest that these factors explain approximately one quarter of the increase in housing debt. The remainder is shown to be attributable to factors that affect the incidence of housing debt conditional on homeownership and the number of years that households have owned their homes, such as equity extraction, refinancing, and extended financing terms. The detailed loan information in the SCF further suggests that rate refinancing and associated term extensions may be an overlooked contributor to the rise in housing debt.