Newrez Survey Highlights Credit Card Debt Pressure While Homeowners Remain Confident in Mortgage Payments
Newrez, a leading homeownership company, has released new survey findings highlighting the financial challenges facing homeowners who carry credit card debt. The research shows that high-interest consumer debt is creating financial stress for many households, influencing spending and saving decisions and affecting homeowners’ broader perceptions of their financial well-being.
At the same time, the survey points to a significant degree of resilience among homeowners. Despite the pressure created by credit card balances, most respondents remain committed to homeownership and continue to prioritize their mortgage obligations. Many homeowners also believe they can manage their current debt while taking steps to improve their financial position.
According to the survey, 51% of homeowners carry a credit card balance from month to month. With credit card interest rates remaining elevated and consumer debt levels near record highs, these balances can represent a substantial financial burden for households already managing mortgage payments, everyday expenses and long-term savings goals.
The findings indicate that many homeowners are therefore considering strategies to reduce or consolidate their credit card debt. Options such as personal loans, home equity loans and home equity lines of credit are being evaluated as potential tools for lowering borrowing costs, accelerating repayment and improving monthly cash flow.
Credit Card Debt Creates Significant Financial Pressure
The survey highlights the emotional and financial impact of carrying credit card debt. Nearly six in 10 homeowners with credit card balances, or 59%, say their debt negatively affects their financial situation.
The burden extends beyond the actual amount owed. A significant majority of respondents indicated that eliminating their credit card debt would provide meaningful financial relief. In total, 84% said they would feel significant relief if their credit card balances were paid off.
The research also illustrates how financial stress can affect homeowners’ everyday lives. More than half of homeowners surveyed, or 51%, said they have lost sleep over their finances. Meanwhile, 67% said they feel overwhelmed by their finances at least sometimes.
Only 48% reported feeling in control of their finances most or all of the time, suggesting that many households are navigating a challenging financial environment even when they remain current on their primary housing obligations.
These findings demonstrate that financial pressure can exist even among homeowners who continue to meet their mortgage payments. Credit card balances, particularly when carried over multiple billing cycles, can add another layer of financial complexity to household budgets.
Homeowners Are Making Financial Tradeoffs
The impact of credit card debt is also reflected in homeowners’ spending and saving decisions.
More than seven in 10 homeowners with credit card debt, or 71%, said they have reduced spending or saving over the past year because of their balances. These adjustments can affect both discretionary spending and essential household expenses.
Among those surveyed, 41% said they reduced travel, leisure or other discretionary spending because of credit card debt. Another 37% reported cutting back on everyday expenses, including groceries.
Savings have also been affected. Approximately 36% said they reduced contributions to savings or emergency funds as a result of their credit card debt.
These tradeoffs can create longer-term financial consequences. Reducing discretionary spending may provide immediate relief, but cutting emergency or retirement savings can make it more difficult for households to build financial resilience over time.
The survey therefore suggests that homeowners are attempting to balance competing priorities: maintaining their homes, paying down expensive consumer debt and preserving enough savings to handle future financial needs.
Commitment to Homeownership Remains Strong
Despite these pressures, the survey found that homeowners continue to view their homes as important sources of stability and long-term financial security.
Three-quarters of homeowners with credit card debt consider their debt manageable. At the same time, 84% said paying off their credit card balances is a high priority.
The commitment to homeownership is particularly apparent among respondents who have both a mortgage and credit card debt. Nearly nine in 10, or 89%, said they are confident they can continue making their mortgage payments.
Another 90% said they prioritize their mortgage payment over most other bills.
This suggests that homeowners view maintaining their housing as a central financial priority, even when other areas of their budgets are under pressure.
Homeownership itself also remains closely associated with financial stability. According to the survey, 89% of homeowners with credit card debt believe owning a home provides a sense of stability. Meanwhile, 84% consider homeownership one of the best ways to build long-term wealth.
Protecting the Home Remains a Financial Priority
The strong emphasis on mortgage payments reflects the importance homeowners place on maintaining their housing security.
A mortgage is typically one of the largest financial commitments a household makes. Missing payments can have serious financial consequences, making mortgage management a priority for many homeowners.
The survey indicates that homeowners are actively protecting this commitment even as they manage other forms of debt.
Newrez Chief Commercial Officer Leslie Gillin said homeowners are carrying a substantial financial burden but remain confident in the value of owning a home. According to Gillin, homeowners with credit card debt continue to focus on protecting their homes while seeking ways to improve their overall financial outlook.
The findings suggest that this commitment may be supported by the broader role homeowners associate with residential property. For many respondents, a home represents more than a place to live. It is also viewed as a source of stability and a potential long-term wealth-building asset.
Debt Consolidation Gains Attention
As homeowners seek ways to manage high-interest credit card balances, debt consolidation is becoming an increasingly important consideration.
More than half of homeowners with credit card debt, or 52%, said they have explored debt consolidation options during the past year. These options include personal loans and home equity products.
Among homeowners who are familiar with these financial products, 71% consider personal loans effective for paying down debt, while the same percentage view home equity loans as effective.
Home equity lines of credit, commonly known as HELOCs, were also viewed positively. Approximately 69% of respondents familiar with HELOCs said they consider them effective debt-management tools.
The interest rate associated with credit card debt is one reason homeowners may be exploring these alternatives. Moving high-interest revolving debt into a product with a lower rate may reduce the cost of borrowing, depending on the borrower’s qualifications, fees and specific loan terms.
Interest Rates Can Affect the Cost of Repayment
The survey analysis provides an example of how interest rates can influence the total cost of paying off a credit card balance.
The average credit card interest rate cited in the research is 19.57%, compared with an average three-year personal loan rate of 12.41%.
For a homeowner carrying an average credit card balance of $6,519, the difference can become meaningful over the life of the repayment period.
Using a three-year personal loan at 12.41%, the estimated monthly payment would be approximately $218, with total interest of roughly $1,322.
By comparison, paying approximately $218 per month toward the same $6,519 balance on a credit card carrying a 19.57% interest rate would take about 42 months to eliminate the debt and result in approximately $2,494 in interest.
The example illustrates how a lower interest rate, when combined with a fixed repayment schedule, can potentially shorten the repayment period and reduce total interest costs.
The difference can become even greater when borrowers make only minimum payments. Under the example provided by Newrez, minimum credit card payments could begin at approximately $174 and decline over time, potentially extending the repayment period for more than 25 years and resulting in more than $10,000 in interest.
Actual repayment costs will vary based on individual credit profiles, interest rates, fees, payment amounts and loan terms.
Personal Loans Offer One Consolidation Option
Personal loans are among the debt consolidation products considered by homeowners.
These loans can provide borrowers with a fixed amount of money that can be used to pay off outstanding credit card balances. Depending on the terms, the borrower may then make a fixed monthly payment over a predetermined period.
One potential advantage is predictability. A fixed-rate personal loan can provide a defined repayment schedule, allowing borrowers to understand how much they will pay each month and when the debt is expected to be fully repaid.
However, the survey also found that 40% of homeowners with credit card debt expressed concerns about interest rates associated with personal loans.
That concern highlights the importance of comparing actual loan offers rather than assuming that consolidation will always result in savings. Borrowers should consider the interest rate, origination fees, repayment period, monthly payment and total cost before moving existing debt into a new financial product.
Home Equity Products May Provide Another Alternative
Homeowners may also consider using the equity built up in their properties to manage certain forms of debt.
Home equity loans and HELOCs allow qualified homeowners to borrow against the value of their homes, subject to applicable lending requirements and the amount of available equity.
Home equity loans generally provide a lump sum, while HELOCs typically provide a revolving line of credit that can be accessed as needed during a specified draw period.
The survey shows that many homeowners familiar with these products view them as effective debt consolidation tools. However, using home equity to pay off unsecured debt also introduces important considerations because the home serves as collateral.
Homeowners evaluating these products therefore need to consider not only the potential interest savings but also the risks and costs associated with borrowing against their property.
Financial Education Can Help Homeowners Make Informed Decisions
The survey findings underscore the importance of financial education as homeowners navigate multiple forms of debt.
Credit card balances, mortgage obligations, emergency savings and retirement contributions can all compete for limited household resources. Understanding how interest rates and repayment structures affect long-term costs can help consumers make more informed decisions.
Debt consolidation may be beneficial for some homeowners, but it is not automatically the right strategy for everyone. A lower monthly payment, for example, does not necessarily mean a lower total cost if the repayment period is significantly extended.
Homeowners should evaluate their complete financial situation and understand the terms of any new borrowing before making a decision.
Newrez Focuses on Supporting Homeowners
Gillin said that developing a plan for addressing credit card debt can make a meaningful difference for homeowners, potentially reducing interest expenses and shortening repayment periods.
She also emphasized that personal loans and home equity products may help some homeowners reduce high-interest debt and free up cash flow for other financial priorities, including emergency and retirement savings.
For Newrez, the survey represents part of its broader focus on supporting homeowners as their financial needs evolve.
The company says its mission is centered on making homeownership possible while providing resources and solutions designed to help homeowners navigate changing financial circumstances.
Homeownership Remains a Source of Long-Term Confidence
The Newrez survey paints a mixed picture of the current financial environment for homeowners.
On one side, credit card debt is clearly creating pressure. A majority of homeowners carrying balances report negative financial effects, many are experiencing financial stress and more than seven in 10 have made spending or saving tradeoffs because of their debt.
On the other side, homeowners continue to demonstrate a strong commitment to their homes. Most consider their credit card debt manageable, prioritize paying it off and remain confident in their ability to maintain mortgage payments.
The findings also demonstrate that homeowners continue to associate homeownership with stability and wealth creation. Even while dealing with elevated consumer debt, 89% say owning a home provides stability and 84% view homeownership as one of the best ways to build long-term wealth.
As households look for ways to improve their financial positions, debt consolidation and financial planning may become increasingly important considerations. The potential benefits of lower-cost borrowing must be weighed against fees, repayment terms and the risks associated with taking on new debt.
Ultimately, the survey highlights a key theme: homeowners may be under significant financial pressure, but their commitment to maintaining homeownership remains strong. By evaluating their debt, understanding available financial options and developing structured repayment strategies, many homeowners are seeking ways to reduce financial stress while protecting one of their most important long-term assets.
Source link: https://www.businesswire.com
