You’ll Never Guess Which Generation Has the Lowest Mortgage Rate

Arecent breakdown of mortgage rates by generation contains a few surprises, finding that millennials on average secured lower rates than baby boomers.

The report earlier this month from Freddie Mac shows that millennials are tied with Gen X for the lowest home loan rate at origination, at 4%. Mortgage rates for boomers are slightly higher, at 4.1%, despite that generation’s much higher propensity for refinancing.

For the silent generation, which preceded the boomers, rates average 4.3%. Meanwhile, the youngest adult generation, Gen Z, has the highest average mortgage rate, at 4.9%. That’s likely because the oldest members of Gen Z, who are now 27, are more likely to have purchased their first home as mortgage rates spiked in the past few years.

Meanwhile, millennials, who are now aged 28 to 43, were more likely to have been entering the market for homes during the historic run from 2011 to 2021, when rates mostly remained well below 5%.

Average Mortgage Rates by Generation

Millennials and Gen X locked in the lowest rates

The finding is a sliver of good news for millennials, who have been called the "unluckiest generation" after entering the workforce just as the Great Recession wrecked the global economy.

However, the good news comes with a catch. While millennials are tied for the lowest mortgage rates, they are saddled with the highest monthly payments of any generation, due to the larger loan amounts at origination.

Millennials are paying an average of $1,900 every month toward their mortgages, on origination amounts of $290,000. That's more even than the $1,600 monthly payments owed by rate-burdened Gen Z, who took out loans averaging $224,000 at origination.

Boomers, meanwhile, owe just $1,500 per month on their mortgages, on loan amounts of $229,000. The refinance rate for boomers stands at 65.2%, compared with 52.7% for Gen X, 27.5% for millennials, and just 3.2% for Gen Z.

The silent generation, which has the lowest average loan origination amount of $195,000, also has the lowest monthly payment, at $1,200.

Mortgage Payments by Generation

Millennials have the highest average mortgage payments, because their loan amounts at origination are the largest of any generation.

On the upside for millennials, they are about to enter their prime earning years—the ages from 45 to 54 when median wages peak for the typical worker.

Though it might come as a surprise, millennials may already be the highest-earning generation ever for their age, despite the setbacks of the Great Recession and the COVID-19 pandemic at key points in their careers.

According to economist Kevin Drum, in 2021, the typical 40-year-old millennial had an income of $49,000, higher than the inflation-adjusted $39,000 the typical baby boomer earned at age 40. (The difference is due almost entirely to wage gains by women, while earnings for men have remained roughly flat.)

If that trend holds true as millennials enter their prime earning years, the beleaguered generation could finally gain the upper hand in their personal finances—and in the housing market.

Source: Realtor.com, Keith Griffith