Gen Z mortgage payments are double those of earlier generations

If millennials thought they had it tough buying their first house, then spare a thought for Gen Z, whose mortgage payments will be roughly double what previous generations have had to contend with.
Home-buyers born in the late 1990s will be paying on average £1,739 a month in mortgage repayments, according to research from Hamptons, the estate agent.
By contrast millennials, those born in the 1980s to mid-1990s, will have been paying around £863 a month, once adjusted for house price inflation, when they first got on the property ladder.
The combination of near-record house prices and the increase in mortgage rates, which are not expected to return to pre-Covid levels, means Gen Zers, on average, are forecast to pay £104,000 in repayments over the first five years of their mortgage.
That compares with £51,800 for millennials, £55,400 for Generation X and £46,500 for baby boomers. In its analysis, Hamptons inflation-adjusted older mortgage repayments to reflect 2024 house prices.
Baby boomers were born from 1946-64 and Gen X from 1965-80.
Despite the hefty rise in house prices over the past 50 years, millennials’ monthly mortgage repayments in the first few years of owning their first home were not dissimilar to previous generations. That reflected the sharp drop in interest rates during the financial crisis, when many millennials would have been looking to get on the housing ladder.
Millennials’ mortgage repayments worked out at around £863 a month on average in the first five years of home ownership. Gen X in the mid-1990s paid the equivalent of £923 a month and baby boomers paid £775 a month.
However, higher house prices have left millennials with much more left to pay on their mortgages than previous generations. Hamptons estimates that, after adjusting for inflation, millennials paid an average of £246,000 for their home when they began buying in about 2011, significantly more than the £149,000 paid by Gen X and the £74,000 paid by baby boomers.
At the halfway stage in a typical 25-year mortgage term, baby boomers and Gen X had repaid about 60 per cent of their loans but millennials, many of whom are now close to that halfway point, are likely to have paid off just shy of 40 per cent, Hamptons calculated.
Even among millennials there is a divide, Hamptons found. Older millennials who bought earlier and benefited most from ultra-low interest rates following the financial crisis will have been able to repay a larger portion of their loans. Younger millennials probably bought at higher prices and are projected to pay higher rates on more of their loans.
Aneisha Beveridge, head of research at Hamptons, said the higher mortgage costs facing millennials and Gen Z will mean they have less disposable income than their parents and grandparents.
“Stress testing by lenders has made higher rates manageable for most borrowers,” she said. “But longer-term, higher mortgage payments will still squeeze millennials at the point they’re starting families and when their careers are close to peaking. It’s likely that money which was enjoyed or invested by previous generations at the same point will be tied up for longer by millennials’ and Gen Z’s mortgage bills.”