For many, high mortgage rates are a major deterrent to buying a home, but this isn’t stopping millennials from pursuing homeownership. In fact, they’re the only generation showing increased interest in buying a home, according to a recent Realtor.com survey.
Millennials Remain Resilient
Despite an uncertain market, nearly one in four millennials plan to buy a home within the next six months. This is a notable increase from September 2024, when only 15% of millennials (ages 29-44) shared this sentiment. This trend is particularly surprising given that half of millennials and Gen Z have postponed home purchases due to high rates.
“Persistently high mortgage rates continue to limit buyer activity,” explains Hannah Jones, senior economic research analyst at Realtor.com. “One-third of respondents indicated that they have delayed a home purchase due to still-high rates, consistent with sentiment last fall when rates were near current levels.”
As of May 22, current mortgage rates have climbed to 6.86%, according to Freddie Mac data. Jones notes, “Younger generations, many of whom are first-time buyers, are the most impacted by high interest rates.”
Generational Divides in Home Buying
While two-thirds of all survey respondents admit mortgage rates have influenced their decision to buy, some generations are less affected.
Baby boomers (ages 61-79) stand out, with 41% stating that mortgage rates don’t impact their home-buying decisions. However, only 2% would consider a home with rates exceeding 6%, with a majority (63%) looking for rates below 5%. The last time a 30-year fixed mortgage fell below 5% was in August 2022, reaching 4.99%.
In contrast, Gen Z (ages 13-28) is the most cautious. Adults in this generation who are in a position to invest are wary of high mortgage rates, often preferring to rent than commit to a high mortgage.
Financing Home Purchases
When it comes to financing, 57% of all surveyed generations used personal savings. Additionally, 15% tapped into personal investments or retirement accounts, and 12% received gifts or loans from family. Among those planning to buy in the next six months, one in four intend to use retirement accounts or personal investments.
Jones highlights a common challenge: “Across much of our research, we see a trend where potential homebuyers feel stuck when it comes to buying a home due to their current mortgage rate.” An April Realtor.com survey found that half of potential sellers with a mortgage feel “locked in” by current high rates, a feeling that intensifies for those who have considered selling for over a year.
“Mortgage rates on top of an insufficient supply of budget-friendly homes complicates the affordability picture for many homeowners, especially first-time homebuyers who do not have equity from their existing home to help offset mortgage rates,” Jones adds. “However, we expect that this lock-in effect will ease as more homeowners grow tired of waiting for significant rate changes and as life factors such as jobs, kids, and retirements drive more to make a home purchase.”