Student debt may hurt US housing recovery

[WASHINGTON] The growing student loan burden carried by millions of Americans threatens to undermine the housing recovery's momentum by discouraging, or even blocking, a generation of potential buyers from purchasing their first homes.

Recent improvements in the housing market have been fuelled largely by investors who snapped up homes in the past few years. But that demand is waning as prices climb and mortgage rates rise. An analysis by the Mortgage Bankers Association found that loan applications for home purchases have slipped nearly 20 per cent in the past four months compared with the same period a year earlier.

First-time buyers, the bedrock of the housing market, are not stepping up to fill the void. They have accounted for nearly a third of home purchases over the past year, well below the historical norm, industry figures show. The trend has alarmed some housing specialists, who suspect that student loan debt is partly to blame. That debt has tripled from a decade earlier, to mo…