Millennials, Gen Z Dominate Mortgage Market

More mortgages are being taken out by Millennial and Gen Z buyers than their older counterparts, a trend boosted by Zoomers’ thirst for homeownership.

A new analysis from Redfin found that two in five — just shy of 40% — of new mortgages issued in 2023 went to homebuyers under 35, while an additional 26.5% went to buyers in the 35-44 age range.

Middle-aged buyers between 45 and 54 grabbed just 16.1% of new mortgages, followed by 55-64-year-olds (10.8%) and 65-74-year-olds (5.4%).

Younger buyers are dominating the mortgage market due to two major factors: prime homebuying years and the prevalence of cash among older buyers.

Younger Americans are always primed to take these top spots because people tend to take out fewer new mortgages as they age.

But some other factors are also playing out here. For one, cash purchases have increased alongside rates, and older buyers are more likely to have equity and cash on hand for a new home. The recent surge in home prices pushed U.S. homeowners’ tappable equity to a record $11 trillion.

Plus, as Millennials and older Zoomers age into their homebuying years, the stress of high rates isn’t as much of a deterrent. 

“First-time buyers aren’t as spooked by high rates as people who are trying to move up to a bigger or better home,” Antonia Ketabchi, a Maryland Redfin agent, said. 

“High costs are still a challenge, but younger people are excited about the fact that they’re looking to buy their first home, and they’re not locked in by a low mortgage rate because until now they’ve been renting. Plus, they weren’t in the market three years ago when mortgage rates were sitting under 3%, so they don’t have an ultra-low point of comparison.”

Zoomers in particular are jumping into the housing market despite today’s affordability struggles. This demographic has a higher homeownership rate than Millennials and Gen Xers when they were the same age.

Gen Z is more likely to prioritize homeownership as a financial goal, with 60% of Gen Z respondents citing it as a top priority compared to 52% of Millennials. In contrast, Millennials were more likely to prioritize paying off debt and building an emergency fund.

The data applies only to primary home purchases disclosed through the Home Mortgage Disclosure Act.

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