Gen Z homebuyers face mortgages double that of earlier generations, statistics show

Gen Z homebuyers are grappling with mortgage repayments of over £1,700, double that of prior generations, research has shown.

Figures from the estate agent Hamptons show that homebuyers born in the late 1990s pay, on average, £1,739 a month in mortgage repayments, making home ownership feel more elusive than ever for ‘Generation Z’.

These figures mark a stark contrast to other generations, who paid less than half that amount when they first landed on the property ladder. Baby Boomers were met with the lowest mortgage repayments at £775, whilst Millennials paid £863, and Gen X paid £923.

The growing concern for Gen Z homebuyers is underscored by data from Halifax, the UK’s largest mortgage lender, showing house prices rose for the third consecutive month in October, nearing record highs.

Rising interest rates are also contributing to rising mortgage prices

Two main factors are contributing to the surge in mortgage payments – the first being rising house prices, which are being driven by demand for houses far outweighing supply. The UK House Price Index reported an average property price of £290,000 in January 2023, reflecting a 73% increase over the past decade.

Rising interest rates are also contributing to rising mortgage prices. The Bank of England has raised interest rates to combat inflation, pushing mortgage rates above 5% in 2023. These costs are then pushed onto buyers, making monthly repayments even more burdensome for first-time buyers.

While young people grapple with rising mortgage costs, the UK public is seemingly failing to recognise the reasons behind the struggle. A study by King’s College London in 2022 highlighted this significant misconception, with almost half of those in the study believing that young people are struggling as they spend too much on poor lifestyle choices, such as takeaway coffees and subscription services.

Such views fail to recognise the wider societal issues confronting younger generations over affordable housing. A study by the National Centre for Social Research found that 81% of Gen Z individuals want to buy a house.

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

Aneisha Beveridge, Head of Research at Hamptons

However, increased pessimism around housing affordability is raising doubts for young people, with 78% expecting house prices to rise further in the next decade.

Aneisha Beveridge, Head of Research at Hamptons, said that Gen Z and Millennial homebuyers will be left out of pocket by rising house prices, compared to their parents and grandparents. She said: “Longer-term, higher mortgage payments will squeeze Millennials at the point they’re starting families and when their careers are close to peaking.”

Beveridge added: “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.”

Amid wider housing concerns, young people are being driven to explore alternative solutions to access affordable housing. Government schemes such as the Lifetime ISA and the Right to Buy scheme can provide crucial support for young people looking to get on the housing ladder, and empower young people to make informed decisions about housing.