by Patricia Fasen
In a sign that consumers may be shifting preferences from renting to homeownership, an analysis by TransUnion found that 55 percent of those who shopped for a mortgage in Q1 2017 were non-homeowners – most of whom are renters. This is a significant rise from Q1 2016 (50 percent) and Q1 2015 (45 percent).
TransUnion’s report found that millennials’ interest in homeownership is growing steadily over time. In 2017, three in 10 (29 percent) non-homeowners who shopped for mortgages were millennials, up slightly from 28 percent in 2016 and 27 percent in 2015.
In addition, 34 million renters between ages 25 and 44 – typically a prime age range for homeownership – were credit eligible for a mortgage. Just 36 percent of renters under 44 years old had a VantageScore 3.0 credit score below 580, a common benchmark used by some institutions to determine whether a borrower qualifies for a low down payment loan. However, many renters prefer keeping their rental status until they are at a good place financially before considering home buying. Doing this helps them financially, saving them money in the long run and allows them to work on improving their credit score. In the meantime, they can maintain their lives and build their credit, through rent, small monthly payment services, and renters insurance offered by companies like Insured ASAP.
A prior TransUnion survey of renters found that more than half (51%) would be more likely to choose a property if they knew their landlord would report their rental payments to credit bureaus. Nearly eight in ten (79 percent) survey respondents said they prioritize rental payments above all other monthly bills.
Property managers use TransUnion Resident Credit to report the amount and timeliness of a monthly rental payment, or any balanced owed for a payment. Renters’ payments appear on their credit report along with other financial obligations. Some consumers, especially subprime consumers, may experience an increase in their credit score as a result of on-time payments being reported.