Despite mortgage rates hovering near record lows for much of the year, a report from the Federal Reserve Bank of Kansas City said that low income households have been wary of mortgage debt.
Kansas City Fed researchers said that lower income individuals have been taking on more debt including auto and credit card debt, they have been avoiding mortgage debt. According to the Fed's data, borrowers in the two lowest income brackets who have added mortgages or home equity lines in the past couple years is about 50 percent of that of the top three income brackets.
If low income borrowers become more willing to take on mortgage debt, the real estate market could see increased demand.
Although the Fed's plan to lower interest rates hasn't drawn in low income households, it has worked. According to Freddie Mac's Primary Mortgage Market Survey, 15- and 30-year fixed-rate mortgages were just slightly above all-time lows in the week ending November 29. Both are also well below averages seen at the same time a year ago.