Debt is sidelining the American dream for millions and mortgage brokers are stepping in to help
American workers are increasingly caught in a debt trap, with 37% holding mortgages and 16% abandoning hopes of homeownership because of mounting financial burdens, according to Zety’s latest Survival Debt Report. The findings, drawn from a nationally representative survey of 1,005 U.S. employees, showed that inflation and flat wages are making it harder for people to buy homes and manage their finances.
Credit cards are the top type of debt, with 71% of workers carrying balances. Mortgages are next, showing how much housing costs add to Americans’ financial stress. “Survival debt” is no longer just a buzzword, said Jasmine Escalera, a career expert cited in the report. “People are borrowing just to get by, not to get ahead.”
The report revealed that nearly half (48%) of employees relied on debt in the past year to pay for essentials like groceries and utilities. More than half (56%) said their salaries were insufficient to both manage debt and save for the future. These pressures are forcing 44% to postpone travel, 22% to delay retirement savings, and 16% gave up on buying a home altogether.
Brokers step in as clients struggle
Mortgage brokers have become key partners for clients facing tough financial times. Some are deploying creative solutions, such as refinancing existing loans or consolidating high-interest debt, to help borrowers stay afloat.
"Unfortunately, we know Americans are in debt up to their eyeballs right now,” Mike Alberico, a loan officer with Carolina Mortgage Advisors, told Mortgage Professional America.
“I’ve probably done six cash-out refis, and have taken people off those 2% and 3% rates and sometimes put them on a 7% or 7.125% rate, but the overall monthly payment goes down by like $900 even if their mortgage goes up."
Brian Mozley, chief growth officer at Choice Mortgage Group, said economic uncertainty has made things challenging for both buyers and sellers. Mozley stressed that having as easy a process as possible removes one of those potential pain points that could cause a buyer to back out.
“I think that we have to be prepared as mortgage professionals to be an advisor to our clients. While we don't have all the answers, you have to be empathetic to the situations that people are in and the questions that they're naturally going to have," Mozley told Mortgage Professional America.
“Every situation is different, and we're all unique, and there's no cookie-cutter option for people. I think at the end of the day, you have to dig into each client and look at what their goals are.”
The Zety survey found that only 27% of respondents were aggressively paying down debt, while 21% could only make minimum payments and 9% struggled to meet even those. The reliance on debt to cover basic needs signals a widening gap between income and the real cost of living. The consumer price index (CPI) went up 0.4% in August, double July’s increase. Annual inflation rose to 2.9%, its highest level since January.
