New data published in Hamptons' Generational Affordability Index is bad news for those born between 1981–95 who have made it on to the property ladder.
Those millennials huh? They’ve had it too good, for too long, chomping down on their avocado toasts and going on nice holidays and playing on their fancy phones. Good news from estate agents Hamptons then, which has just published new data that shows that the millennial generation will be the first generation of homeowners to see mortgage repayments rise in the second half of their loan. Assuming they bothered to save up for a house in the first place.
The data, which comes courtesy of Hamptons’ Generational Affordability Index, makes for less than palatable reading considering the already astronomical prices required to get on the property ladder. The issue arises as a result of historically low interest rates that have been in place since the financial crash of 2007, which meant that even though mortgages were much larger when compared with ‘Baby Boomers’ and ‘Generation X’, the average monthly repayments remained roughly the same, when adjusted for inflation.
This is bad for two reasons. Reason one is that, despite average monthly payments being roughly the same, a millennial will have repaid a lot less of the total borrowed than previous generations. Reason two is that, with higher interest rates likely to stick for a while, when various fixed term mortgages end, or remortgages occur, the average monthly payment will rise. As previously mentioned, millennials will be the first generation to experience rising repayments, per Hamptons’ data and methodology.
Average monthly mortgage payments in 2024 prices during the lifetime of a 25-year mortgage
Source: Hamptons, ONS & BoE. Note: Dotted lines reflect projections. Credit: Hamptons
‘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 were on their way down,’ says Aneisha Beveridge, head of research at Hamptons. ‘In the early days, this meant that despite much higher house prices, in real terms, millennials’ mortgage repayments have looked remarkably similar to the previous two generations.’
‘However, the shift towards higher mortgage rates in recent years has changed everything. Unlike previous generations who generally benefited from interest rates drifting down, making repayments more affordable, Millennials have been uniquely squeezed,’ Ms Beveridge continues. ‘They’ve taken on lots of debt at record low rates, only to see those rates rise. And with rates set to stay higher for longer, most Millennials are likely to see their mortgage payments increase as they enter the second half of their mortgage term.’
If you are a member of Gen Z I have two things to say to you. Number one, welcome to country life dot co dot uk. Number two, good luck ever affording a house. No number of avocados or holidays foregone will really matter. Go enjoy your lives. Sincerely, a millennial.
James Fisher is Country Life’s Deputy Digital Editor. He lives in London
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