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“Will I ever be able to buy my own home?” It’s a question that has long loomed over young people, but one that has only become more urgent in recent years. House prices have continued to rise; the rental market resembles a scenario from The Hunger Games. And now, there’s another hurdle for would-be buyers in Generation Z. According to research from estate agent Hamptons, members of Gen Z – who are currently aged between 12 and 27 – can expect mortgage payments twice as high as the generations that came before them.
The figures are eye-watering. Hamptons’ data predicts that Gen Z will pay £104,400 on average in the first five years of their mortgage, while older millennials, classified as under the age of 44, have paid £51,800 in the same period. Of course, let’s not forget that there are plenty of millennials who haven’t yet made it onto the housing ladder – I’m one of them – but that’s another story. Meanwhile Generation X, aged 44 to 59, paid £55,400, and Baby Boomers, aged 60 to 69, paid £46,500. Monthly repayments follow a similar pattern: the study estimates that the average Gen Z buyer will pay £1,739 a month in mortgage repayments on their first home, compared to £863 paid by home-owning millennials, £923 paid by Gen X and £775 paid by Boomers.
No wonder, then, that Gen Z’s aspiring homeowners are feeling discouraged. 25-year-old writer Charlie has been living with her dad in the Midlands since she graduated from university, and has been saving up to buy her own house for about three years. “It started with just putting little bits away here and there in case any unexpected expenses popped up,” she says. “When they did, I carried on saving. It’s bittersweet that I have some inheritance money from grandparents that bolstered my savings and I’ve got a more than decent amount saved up for a deposit now – more than I ever thought I’d be able to save.”
Bittersweet because, despite having put this money aside, she has struggled to find an achievable mortgage. “I had my first mortgage appointment earlier this year, around April, and was told I’d be looking at around £1,500 a month,” she says. That wouldn’t be feasible for Charlie with her current income – nor indeed would it be for many young people. The most recent Graduate Outcomes Survey from the Higher Education Statistics Agency found that the median salary of recent UK graduates in full-time employment was £27,500.
Subtract that mortgage payment from their monthly take-home wage, then, and they’d be left with a couple of hundred pounds to live on (and that’s without taking bills into account). When Charlie looked around again, “some [plans] even went up to around £2,700 [monthly], and that was on a 40-year mortgage plan”. Although some mortgage providers do offer one per cent or five per cent deposit options, intended to make things easier for first-time buyers, “none of these has addressed the repayment problem, and that makes them unviable for me at least”.
James*, also 25, is in a similar situation, living with family while trying to save up for a home of his own. He’s looked into what possible mortgage payments would be, and “they seem a little unrealistic. I may be able to afford them for maybe six months, but they would be unsustainable on a longer-term basis, and I would be really squeezed”. He has “cut back significantly on lifestyle spending”, yet he’s aware that there are “so many other factors” at play beyond his control, “so I try not to be too hard on myself”.
But beyond this, Gen Z faces a perfect storm in the house-buying market. What has caused this perfect storm for Gen Z? It’s a double whammy of high house prices and higher interest rates, which rose sharply in 2022 (they have fallen a little since then, but remain well above the pre-pandemic era). Older people certainly had to contend with one of those problems, but not both at the same time. Rates are now “so much lower” than they were in the Eighties, notes mortgage broker Serena Smith of Mortgages With Serena, who focuses on getting millennials and Gen Z buyers onto the property ladder. In 1980, for example, the Bank of England’s base rate, which influences the rates offered by lenders, hit 16 per cent.
Even when house prices skyrocketed in the Nineties and Noughties, mortgage rates tended to be lower
But back then, the average house cost £19,273, so higher rates were easier to absorb. In July 2024, meanwhile, this average stood at £289,723. “Properties that were originally bought when they were new builds in the Eighties are now worth so much more than they originally were … The size of the loan has changed so dramatically,” Smith says. As a result, longer mortgages are becoming more common. “Someone of our parents’ generation would assume 25 years for a mortgage,” she adds, but now 40-year plans are increasingly prevalent. According to financial data site Moneyfacts, 84 per cent of mortgages now have a term of 40 years.
Even when house prices rocketed in the Nineties and Noughties, mortgage rates tended to be lower (especially in the wake of the global financial crisis, post 2007) so payments weren’t all that different to those seen in previous generations. 45-year-old Jai Fagan is a charity manager based in Bristol. She and her husband bought their first home in south London in 2005, and ended up paying £1,100 each month at first for their mortgage. “At the time I have to admit, I felt stressed about it – I think it was the commitment level, more than the actual price,” she says. “It was slightly more than rent, but obviously an investment.”
She also notes that the couple didn’t have to make the lifestyle changes that younger generations are now expected to take on in order to buy. “We paid our mortgage and bills, shopped in Waitrose, had a gym membership [and] ate out regularly,” she says. Their circumstances changed during the financial crisis, “but because our mortgage rate tracked the base rate so closely, the monthly payment dropped to £700”. She has crunched the numbers and concluded that, “to buy the same flat today with the necessary deposit and the associated property price increases, we’d need to be on a household income of almost £300,000. So there’s no way we could buy that today”. Indeed, among her younger friends in their late twenties and early thirties, “only a few own a property, usually because parents have helped them or they’ve inherited money from grandparents”.
Getting a mortgage was also relatively easy for Lisa Francesca Nand, a TV travel expert who coaches others to start their own travel business through her company LFN Travels. “I bought my first flat in July 2003 at the age of 28,” she explains. “If it hadn’t been for an ad I saw in the Evening Standard from someone offering mortgage advice, I probably wouldn’t have sought it out and my life might have been a lot harder.” She had “no deposit nor any family money to borrow”, but a mortgage advisor told her she “could borrow more than the flat was worth with a 105 per cent mortgage” through Northern Rock (the bank that would later become a high-profile casualty of the banking crisis in 2007, when it had to be nationalised by the UK government).
Her first mortgage rate was “around 3 per cent, and I remember the payments being a very affordable £600 or so a month”. She remortgaged within a year and sold the flat to upgrade to a bigger property in 2007. “I am fully aware just how lucky I was to have been handed that 105 per cent mortgage at a time of rising house prices,” she says. Her most recent experience has been very different: Nand bought her new family home in 2023 and the higher interest rates have “hit hard”, especially as a single parent.
For all this talk of rates, though, for many young people, getting together a deposit while handing over much of their monthly income in rent is a difficult feat. “I’ve not even looked into future mortgage payments, that’s a thought for another day,” says Rebecca*, 24, who works in marketing. For her, “the first hurdle is definitely the deposit – despite having some savings I know I won’t even skim the surface of a half-decent flat. I’d be looking to buy with my boyfriend and he has even less [in] savings than me, so we’re not sure about it yet.”
Charlie, 25At this point, it doesn’t feel like I’ll ever own a home, which is devastating
And as tempting as it is to think of home ownership as a watershed moment when it comes to gaining “adult” stability, the worry certainly doesn’t end when you get accepted for a mortgage. 26-year-old Paris, who works in policy and public affairs, is currently in the process of buying a two-bedroom maisonette in London, after five years of saving. She’d previously assumed that shared ownership would be her only option in the capital, but her broker told her that she’d actually meet the criteria for a first-time buyer mortgage scheme that would allow her to borrow up to five times her salary. “If the economy flatlines … my wage could stagnate, which worries me,” she says. Her property is a leasehold, too, “so service charges increase”, and she was concerned recently when there were rumours suggesting that the government might abolish the single person discount on council tax, which would raise her living costs significantly.
It’s now thought that particular measure has been ruled out by Downing Street, but the obstacles faced by younger people hoping to buy on their own, rather than as a couple, are considerable. 27-year-old Tasha, who is based in Sheffield, has been saving since 2020, but has to spend around £950 on rent and bills. “Thankfully I have a really secure job, but the [financial] impact is still a lot because I’ll be doing it by myself,” she says. “I really struggle with how first-time buyers schemes are targeted at couples and families but never people who are trying to do it on their own. There is no support.”
Tasha says she longs “to have my own place and settle there and make it my own”, adding: “I try to think ‘it’ll happen when it happens’, but I’ve been saving for almost five years and have quite a bit saved, [but] it’s still not enough… It’s incredibly frustrating.”
Her sentiments are echoed by Charlie. “At this point, it doesn’t feel like I’ll ever own a home, which is devastating because I want nothing more than to have a space that’s entirely my own. But I’ll never be able to afford mortgage payments as they are now.” In fact, she’s debating whether to use the money she’d set aside for a deposit to pay for a lump sum of rent up front instead. “No one I know thinks they’ll ever own a home,” she says. “In fact, a lot of them are even struggling to rent at the moment. A lot of my friends have, like me, moved back in with parents or family members. So it’s even a dream to rent, let alone own a property.”
*Names have been changed
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