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Softening the Blow: Income Shocks Mortgage Payments and Emergency Savings

Title:
Softening the Blow: Income Shocks Mortgage Payments and Emergency Savings
Summary:

Data from the FINRA Investor Education Foundation’s National Financial Capability Study suggest that households without emergency savings are more likely to experience mortgage payment problems when faced with an income shock—a significant, unexpected drop in income—than those with emergency savings. Among households experiencing an income shock, those without emergency savings are three times more likely than households with emergency savings to make a late mortgage payment—and almost twice as likely to be involved in a foreclosure. Further, low levels of financial literacy are related to an increased likelihood of late mortgage payments.

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