Americans’ Economic Stress and Its Impact on Home Finance

May 12, 2016

The recently released Marketplace Economic Anxiety Index revealed that though the US economy appears to have grown stronger over the last few months, this hasn’t led Americans to have greater confidence in their own economic security.

Based on data from a poll by Marketplace and Edison-Research, the winter 2016 Anxiety Index, remained at 31 on a scale of 1 to 100, with a higher number representing greater economic anxiety. This number is meant to express a person’s financial stress as it relates to their economic situation.

60% of respondents reported that they feel somewhat anxious about their current financial situation, and 30% said they were experiencing enough anxiety to cause them to lose sleep. Another key metric was that 26% felt it would be “very difficult” if faced with an unexpected expense of one thousand dollars and another 32% would find it “somewhat difficult.”

How does this economic stress impact home buying and financing?
Among those who currently have a mortgage, the majority are not experiencing a great deal of anxiety about making their payments. Only 3% reported that it was “very difficult” and 14% thought it to be “somewhat difficult” to pay the mortgage each month.

Consumers who aren’t having trouble making current payments but are concerned about lack of savings, difficulty of covering unexpected expenses, or managing finances should they lose their job, are good candidates for a refinance. Homeowners can often ease financial stress by re-allocating the amount their mortgage payment that was reduced over to short term savings, retirement savings, or an education fund for their children.

Anxiety over savings plays a role in home buying as well. When a potential homebuyer is confident about meeting monthly expenses but concerned about not having a large amount of savings, they may not shy away from the purchase, but be interested in limiting out of pocket expenses. Helping them to avoid further depleting their financial safety net might be the deciding factor that helps you to close the deal.

Some of the low down payment options to focus on with this group include:

Photography by [Ion Chiosea] ©

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