Gen Z pay double in mortgage payments compared to older generations

Young buyers face near-record house prices and soaring interest rates

High interest rates and rising house prices mean Generation Z are facing mortgage payments twice as high as the generations before them, new analysis has shown.

Home buyers born in the late 1990s, known as Gen Z, will be paying on average £1,739 a month in mortgage repayments, according to research from estate agent Hamptons.

Those born in the 1980s to mid-1990s, who are considered millennials, by comparison, will have been paying around £863 a month when buying their first house, once adjusted for inflation.

Baby boomers – born between 1946 and 1964 – will have paid an average of £775 a month and a first time Generation X buyer, born between 1965 and 1980, a £923 monthly payment.

The combination of near-record house prices and the increase in mortgage rates, which are not expected to drop below pre-Covid levels, means Gen Z buyers, on average, are forecast to pay £104,000 in repayments over the first five years of their mortgage.

Average repayments over the first five years is £51,800 for millennials, £55,400 for Generation X and £46,500 for baby boomers. The analysis from Hamptons adjusted figures by inflation to reflect 2024 house prices.

It comes as a new index from Halifax, the UK’s largest mortgage lender, showed house prices have risen for the third month in a row, coming close to reaching a record high.

The typical property value in September was £293,399, just £108 below a record high of £293,507 set in June 2022, Halifax said.

Many older millennials experienced high house prices but low mortgage and interest rates. However, Gen Z will have to deal with a combination of both, according to analysis by Hamptons.

Baby Boomers paid the equivalent of £74,000 in 2024 money for their homes but experienced rates of 13.5 per cent.

Millennials, who spent an average of £246,000 for their home when they started buying in 2011, had initial mortgage rates as low as 1.5 per cent.

Aneisha Beveridge, head of research at Hamptons, said that the higher rates would “uniquely squeeze” millennials in the second half of their mortgages, “at the point they’re starting families and when their careers are close to peaking”.

The average price of a first-time property in the UK is now up to £232,769 – the highest level since May 2024, according to Halifax’s index.

In 1997, when the first members of Gen Z were born, the average price was £60,698, according to the Land Registry.

Ms Beveridge, added: “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.

“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. They’ve taken on lots of debt at record low rates, only to see those rates rise.”