Millions of renters, and especially minority and low-income families, may suffer previously avoided economic harms of the COVID-19 pandemic as federal and state relief programs end, according to a report released today by The Consumer Financial Protection Bureau.
The report, “Financial conditions for renters before and during the COVID-19 Pandemic,” finds that some government relief efforts likely helped maintain the financial stability of renters and their families.
The CFPB’s report compared homeowners and renters and found that, on average, renters’ economic conditions were significantly more responsive to relief measures such as stimulus payments and changes in unemployment benefits. When those programs end, the report states, renters and their families may be at heightened risk.
“Today’s report confirms that renters, when compared to homeowners, are more likely to be Black or Hispanic, more likely to have lower incomes, and more likely to be women,” CFPB Acting Director Dave Uejio said. “They are also at particular risk of falling further behind as the nation recovers from the economic impacts of COVID.”
Past economic downturns have seen “communities of color and low-income communities of all races and ethnicities left behind when the broader economy recovers," he said. "We cannot repeat that history.”
Uejio said the CFPB is committed to helping renters and their families thrive. “We must amplify and protect the modest gains renters made during the pandemic to ensure this nation’s full and equitable recovery from COVID-19.”
Using the CFPB’s Making Ends Meet survey and consumer credit data, CFPB researchers found that financial conditions faced by renters and homeowners were divergent before the pandemic. With renters generally experiencing more financial vulnerability than homeowners, they had more to gain from pandemic relief efforts than homeowners and could have more to lose when that relief ends, the report said.
Comparing renters and homeowners, researchers found:
- Renters are more likely to be Black or Hispanic, are younger, and have lower incomes. Before 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’ debt obligations also differed considerably from those of homeowners before the pandemic. In June 2019, renters were more to have student debt and to have used some form of alternative financial service, such as payday lender, pawn shop, or auto-title loans.
- During the pandemic, 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.
- 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.
As government pandemic financial supports end, renters are in danger of falling further behind the broader national recovery, the CFPB said. Renters represent over 30% of U.S. households, and their welfare is critical to the welfare of the larger economy and the communities, it said.
