Rising mortgage costs are putting a significant financial strain on homeowning Millennials, according to a recent survey by Hargreaves Lansdown.
On average, mortgages cost £663 a month, with 16% of people paying over £1,000.
However, research shows that a Millennial buying the average house at the age of 30 today, with a 10% deposit, and a 6.07% mortgage would have a monthly payment of over £1,706.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “Millennials are facing a mortgage nightmare, particularly those in their late 20s and 30s.
“Runaway house prices and the hikes in mortgage rates mean a Millennial buying the average house at the age of 30 today could face a monthly mortgage payment of £1,706.
“As a result, Millennial homeowners tend to be geriatric millennials – in their late 30s and early 40s, who bought when the average property cost closer to £150,000.
“They also include higher-earning younger Millennials. It’s this group who could be in trouble as rates rise.”
The research also found that overall, the age group tend to have reasonable savings levels, and enough cash left at the end of the month to be resilient.
However, dramatically rising rates will inevitably eat into their resources.
Of the over 2,000 respondents to the survey, many claim that they’re already overstretched in other areas, and score particularly poorly for their non-mortgage debts – from affordability to uncertainty and whether they think they’ve borrowed too much.
Coles added: “The good news is that Millennial mortgage holders have some space in their budget.
“The bad news is that it will be eroded by rising prices, so that a year into the cost-of-living crisis only 37% will have enough savings and 8% will have enough cash at the end of the month to be considered resilient.
“It means an awful lot will struggle to make ends meet.
“To make matters worse, they already have weaknesses elsewhere in their budgets, most notably they may have overstretched themselves when it comes to debt.
“Fewer than one in ten are resilient when it comes to the affordability of debt, and two in five are when it comes to the uncertainty of future debts.
“This is a worse score than renters in any age group. They also score worse for their own view of how much debt they are carrying than any renters.”
