What Percentage of Homeowners Have No Mortgage?

Understanding the dynamics of mortgage-free homeownership is crucial for grasping the overall health of the housing market. A record number of homeowners in the U.S. now have no mortgage, which has significant implications for both the housing market and the broader economy. Let’s dive into the specifics.

What Percentage of Homeowners Have No Mortgage?

According to the data analyzed by ResiClub last year:

• 38.5% of homeowners today don't have a mortgage.
• This figure represents a significant increase from 2010, when only 32.1% of homeowners were mortgage-free.

Table: Growth in Mortgage-Free Homeownership

Year	Percentage of Mortgage-Free Homeowners
2010	32.1%
2022	38.5%

The increasing trend in mortgage-free homeownership reflects an aging population and economic resilience.

Implications of Higher Mortgage-Free Homeownership

Impact on the Housing Market

The rise in mortgage-free homeownership brings several significant impacts:

• Buffer Against Interest Rate Spikes: Unlike their counterparts in countries like the U.K. and Canada, where adjustable-rate mortgages are more common, U.S. homeowners are largely shielded from fluctuating market rates. This stability is due to the 96% of mortgage debt in the U.S. being fixed-rate.
• Economic Stability: Mortgage-free homeowners are less affected by spiked interest rates, which allows them to maintain or even increase their discretionary spending. This spending bolsters the economy, making it more resilient against rate hikes.

Regional Variations in Mortgage-Free Homeownership

Mortgage-free homeownership varies significantly across different regions of the U.S. Areas with higher affordability and older populations tend to have more homeowners without mortgages.

High Concentration Areas

• West Virginia: 53.3%
• Mississippi: 50.1%

Lower Concentration Areas

• Maryland: 28.2%
• Colorado: 29.8%

Table: Regional Mortgage-Free Homeownership

State	Percentage of Mortgage-Free Homeowners
West Virginia	53.3%
Mississippi	50.1%
Maryland	28.2%
Colorado	29.8%

County-Level Insights

Regions within states also show significant variations. For instance, Texas boasts a higher concentration of mortgage-free housing units, with 18 of its counties among the top 50 U.S. counties in this category.

The Boomer Effect

Aging Population and Paid-Off Mortgages

The increase in mortgage-free homeowners is largely driven by the baby boomer generation, who have aged into their senior years and often have paid off their mortgages. More than half of mortgage-free homeowners are baby boomers, reflecting this demographic shift.

All-Cash Purchases and Housing Market Trends

Increase in All-Cash Home Buying

With a substantial portion of homeowners being mortgage-free, there has been a notable increase in all-cash home purchases:

• In Q1 2022, 25.8% of home purchases were made in all cash.
• By Q4 2023, this figure rose to 33.5%.

Table: All-Cash Home Purchases

Quarter	Percentage of All-Cash Purchases
Q1 2022	25.8%
Q4 2023	33.5%

Mortgage-free homeowners often use the equity from their previous homes to make all-cash purchases, avoiding the burden of higher interest rates in the current market. This trend not only influences the types of buyers in the market but also impacts housing demand and pricing dynamics.

Summary

The record number of mortgage-free homeowners is reshaping the housing market and providing a buffer against economic volatility. Regions with higher affordability and aging populations are seeing particularly high levels of mortgage-free ownership. Additionally, the trend toward all-cash purchases highlights the changing strategies among homebuyers in response to rising interest rates. This evolving landscape underscores the importance of understanding these demographic and economic shifts for future market predictions.