Millions of renters and their families may suffer previously avoided economic harms of the coronavirus crisis as federal and state relief programs end, the federal consumer financial protection agency warned in a report issued Friday.
The Consumer Financial Protection Bureau (CFPB) said its report – “Financial conditions for renters before and during the COVID-19 Pandemic” – found that some government renter relief efforts likely helped maintain the financial stability of renters and their families. But, the agency said, the report suggests that many renters may be at risk as those programs expire.
The report compares homeowners and renters, the CFPB said. It found, on average, that renters’ economic conditions were significantly more responsive to relief measures such as stimulus payments and changes in unemployment benefits. “When these programs end, renters and their families may be at heightened risk,” CFPB said. “The findings in today’s report will help inform the CFPB’s ongoing work to support renters and their families.”
Comparing renters and homeowners, CFPB said researchers found:
- Compared to homeowners, renters are more likely to be Black or Hispanic, are younger, and have lower incomes. “Prior to the pandemic, average credit scores among renters were 86 points lower than those of homeowners with a mortgage, and 106 points lower than those homeowners who reported paying no mortgage. Renters’ Financial Well-Being Scores were nearly 8 points lower than those of homeowners with a mortgage, and more than 13 points lower than homeowners who reported paying no mortgage,” the CFPB said.
- Renters’ debt obligations also differed considerably from those of homeowners before the pandemic. “In June 2019, renters were more likely than homeowners to have student debt and to have used some form of alternative financial service, such as payday, pawn shop, or auto-title loans,” the agency said.
- During the pandemic, despite poor labor market conditions, renters’ financial conditions, on average, appeared to improve as much as, or more than, those of homeowners. “Renters’ credit scores grew by 16 points during the pandemic, compared to 10 points for mortgagors and 7 points for other homeowners, for example,” the bureau said. “However, renters’ credit scores, though improved, remained substantially below those of homeowners, even accounting for the modest improvements of renters’ credit scores.”
- Renters’ financial conditions throughout the pandemic have been more responsive to changes in government financial assistance than those of homeowners. “Delinquency, credit card use, and credit card debt among renters rose and fell in conjunction with stimulus payments and changes in federal unemployment benefits, while homeowners’ delinquency, credit card use, and credit card debt remained comparatively stable,” according to the agency.
- Among renters, some credit outcomes among groups who qualified for targeted pandemic relief appeared to be more responsive to policy changes than those among other groups. “For example, credit scores among renters with student debt leapt 40 points during the first months of the pandemic. Additionally, delinquency rates among renters with children saw a considerable decline following stimulus payments during the pandemic (dropping from 42.1% to 34.4%), perhaps reflecting that stimulus payments could be larger depending on the presence of children in the family,” the CFPB said.