Here's another reason why it's going to take a while longer for the mortgage market to get moving again: According to a recent survey conducted by Bankrate.com, about 26% of Americans have no ’emergency’ savings – which is basically another way of saying they have no savings whatsoever.
Of those who do have savings, 67% only have enough to cover six months' worth of expenses, while 40% only have enough to cover three months' worth of expenses. Many of those surveyed cited the rising cost of everyday expenses – such as rent, food, gas and clothing – as being the main reason they are unable to save.
Low or stagnant wage growth is another major culprit. Many respondents also said student loans were a major obstacle to saving.
The phone survey of 1,004 adults reveals that the problem is worse among minorities. About 40% of African-Americans surveyed said they had no emergency savings, compared to about 21% of whites. It's also worse among those without higher education: About 36% of those with a high school education or less reported having no savings, whereas only about 10% of those with college degrees reported having no savings.
What this means is that, basically, 26% of Americans are living paycheck to paycheck and, therefore, would never qualify for a mortgage. In fact, the percentage who would not qualify is probably even higher: Recent data from the Bureau of Labor Statistics shows that about 53% of working Americans earn under $30,000 per year.
‘Americans continue to show a stunning lack of progress in accumulating sufficient emergency savings,’ says Greg McBride, Bankrate.com's chief financial analyst, in a release. ‘Even among the highest-income households – those with annual income of $75,000 or above – fewer than half (46%) currently have a six-month savings cushion.’
People between ages 30 and 49 are more likely than any other age group to have no emergency savings, the survey reveals, whereas 18-30 year-olds were the most likely to have up to five months' expenses saved up.
‘Many of those under age 30 have the benefit of lower expenses due to roommates, living with their parents or being students,’ McBride explains. ‘Ages 30 through 49 are high-spending years when expenses often rise faster than emergency savings can keep up.’
In an interview with USA Today, McBride said that for most Americans, saving money in this current economic environment is all about making sacrifices.
‘I've had people stand in front of me with a $5 latte and a $500 iPad and say they couldn't possibly save more than they are now,’ McBride told the media outlet.