A report published by the Consumer Financial Protection Bureau (CFPB), “Financial conditions for renters before and during the COVID-19 pandemic,” examines how the financial conditions faced by renters and homeowners have evolved over the course of the pandemic. The findings indicate that renters’ financial circumstances were more sensitive than homeowners’ to pandemic policy changes and that renters’ finances improved more during the pandemic. Renters benefited more than homeowners from Child Tax Credit (CTC) payments, emergency rental assistance, and other temporary supports and that their finances may be particularly sensitive to the end of these assistance programs.
The researchers used two waves of the CFPB Making Ends Meet survey and compared them to the Bureau’s Consumer Credit Panel (CCP). The wave 1 survey collected data on pre-pandemic financial conditions and the wave 2 survey evaluated changes in financial conditions after the start of the pandemic. The researchers used these data to compare renters and homeowners on a variety of financial outcomes before and during different stages of the pandemic. They also compared subgroups of renters, such as those with student loans, renters earning $40,000 or less, and renters with children.
Renters’ financial conditions, such as delinquency, credit card utilization, and credit card debt, have been significantly more responsive to public policy throughout the pandemic compared to homeowners. For renters, these outcomes appeared to fluctuate in response to stimulus payments and changes in federal unemployment, while homeowner outcomes did not show the same degree of sensitivity. Delinquency rates among renters, for example, dropped several percentage points after stimulus payments and during periods of extended unemployment benefits. After expanded unemployment benefits ended in July 2020, however, delinquency rates among renters began increasing. Similar trends among renters were recorded with credit card utilization and credit card debt. These trends were not as pronounced among homeowners, except in the case of credit card debit, where homeowners decreased their credit card debit more than renters.
The researchers also found that renters’ financial circumstances improved, on average, as much or more than those of homeowners during the pandemic. Renters’ credit scores, for example, grew, on average, by 16 points during the pandemic, compared to 10 points and 7 points for mortgagors and other homeowners, respectively. The research also found variations in financial outcomes among renter subgroups. Credit scores among renters with student debt increased dramatically after the CARES Act paused federal student loan payments in the early months of the pandemic. In contrast, delinquency among renters with children declined drastically following stimulus payments, which were based on the number of children in a household.
Although these findings suggest that renters’ financial outcomes have generally improved during the pandemic, renters remain especially susceptible to financial insecurity. Many pandemic financial supports have already expired or are scheduled to expire soon, which could negatively impact renters’ finances. As the pandemic continues, these results indicate that additional supports, such as continued rental assistance and expansion of Child Tax Credits, could prevent setbacks in renter finances.
Read the report at: https://bit.ly/3Df8w4L