The Economic Perspective: “Multi-generational Loans”

This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program looks at multi-generational loans.  Mike, when you and I have borrowed money to buy homes, we took out those loans as a couple.  Indeed, our parents did the same thing, and so did our grandparents.   But now I understand this is changing for some borrowers. Please explain.

Mike:  Summary Answer

  1. Yes, there’s something new in the borrowing business, especially for big ticket items like home loans
  2. Called “multi-generational borrowing”
  3. Based on the fact that 20% of Americans live in multi-generational households, composed of at least two adult generations living under one roof
  4. This is up from 12% forty years ago
  5. often is married adult children and one child’s parents
  6. in this case, some lenders are allowing both households to be borrowers for a loan – in past, not allowed
  7. complications if indeed to rent part of the home, so beware
  8. also, lenders are allowing the borrowers to decide how to claim tax benefits
  9. shows how business responds to social trends
  10. I’m MW

And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics