According to the Hamptons Generational Affordability Index, Millennials have paid similar amounts in mortgage repayments to Baby Boomers and Generation X over the first half of their mortgage terms
The latest report by Hamptons has found that Millennials, as they reach the midpoint of their mortgage term, will become the first generation to see mortgage repayments increase during the second half of their loan, breaking a pattern experienced by previous generations.
According to the Hamptons Generational Affordability Index, Millennials have paid similar amounts in mortgage repayments to Baby Boomers and Generation X over the first half of their mortgage terms. For instance, in 2024 prices, the average Millennial paid £863 per month during the first five years of their mortgage, compared to £923 for Generation X and £775 for Baby Boomers. Despite this early alignment, Millennials will face sharply different conditions moving forward.
Millennials’ misfortune is primarily due to higher interest rates, which have increased significantly since they first entered the housing market, as per the report. Unlike earlier generations who benefited from dropping interest rates as they paid off their mortgages, Millennials are facing the prospect of paying more as rates jump.
Projections suggest that Millennials still have 61% of their mortgage repayments to make, while Baby Boomers and Generation X had only 41% and 40%, respectively, left to pay at the same point in their loans.
Aneisha Beveridge, head of research at Hamptons, said: Millennials started buying their first homes in the shadow of the 2007 crash, back when house prices were on their way up and mortgage rates on their way down. However, the shift towards higher mortgage rates in recent years has changed everything. Unlike earlier generations who generally benefitted from interest rates drifting down, making repayments more affordable, Millennials have been uniquely squeezed.
Millennials’ situation contrasts sharply with that of Baby Boomers and Generation X, whose mortgage payments dropped in the latter half of their loan terms as inflation and interest rates declined. Beveridge noted that while lenders’ stress testing ensures most borrowers can manage these higher rates, it will still exert financial pressure on Millennials at a crucial stage of life when they are likely balancing family responsibilities and career progression.