Millennials face astronomical debt, according to a recent study released by the New York Federal Reserve. As this generation—those born between 1981 and 1996—experienced a “cosmic duality of yin and yang” such as the significant effects of the global financial crisis and extraordinary technological advancements, among others, it’s hard not to wonder what’s behind the millennial debt numbers.

There are many factors regarding millennials’ delay to enter the housing market (compared with other generations) because of low inventory, high prices and serious competition for mortgages. So that shouldn’t be an unusual significant factor. And though auto loans are following a nine-year growth trend, their portion of that doesn’t seem out of proportion.

If one looks at their astronomical student debt differently, combined with the rest of their debt profile a picture begins to form of a generation displaying surprisingly conservative fiscal behavior. Their credit card debt is lower than Gen X (at the same age) and their retirement is higher. It turns out the story about millennial debt is more complicated than anyone thought.
 

Just how much debt are we talking about?

Millennials’ debt totals about $1 trillion, up 22% from five years ago. But don’t be fooled. The New York Federal Reserve’s study reveals that millennials on the whole are significantly more fiscally conservative than their debt numbers indicate, more so than previous generations. And combined with their investment strategies, the financial situation of millennials is complex and nuanced.

Graph - The Numbers Behind the Debt

How Can Mortgage Professionals Help?

Although millennials continue to drive today’s homebuying rates, the difficult housing market and the complex details of their finances make it hard to get a read on their next move as first-time homebuyers. Mortgage professionals can help millennials better understand their mortgage options based on their finances with:

  • An online financial educational site with tools and information for prospective homebuyers.
  • Low down payment options for qualified borrowers.
  • A consumer-focused resource center featuring tools, resources, and information on renting, purchasing and owning a home.
  • Automated assessments for borrowers lacking a credit score.
  • Automated home valuations, to simplify the homebuying process and potentially reduce borrower transaction costs.

If millennials are thinking ahead for retirement and job security, a first home may well be on their shortlist. Lenders and other mortgage professionals can help provide guidance and a steady port in the storm of today’s market.

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