Young Homebuyers Make Purchasing Plans Despite Financial Risks

The U.S. housing market has been transformed over the past several years by stubborn mortgage interest rates, ultimately creating a more complicated environment for prospective homebuyers. Software company Truework recently surveyed 1,000 recent homebuyers to discover how they're navigating these challenges. The survey found that many prospective buyers across all age groups still aspire to be homeowners, regardless of the financial risks that come along with it.

One financial plan is mortgage refinancing. The survey revealed that 64% of Generation Z and 65% of Millennials are counting on the ability to refinance at a lower rates in the future to reduce their monthly payments and protect their financial stability. Among Baby Boomers, just 32% are buying with hopes to refinance at a lower rate, while 56% of all recent homebuyers view refinancing as important or very important to their long-term financial health.

Should rates remain elevated for an extended period of time, the possible implications for younger buyers—and the ripple effects on the economy—are troublesome. Specifically, we could see:

• People stuck in homes and unable to move due to rate lock-in effects
• Reduced discretionary spending as housing costs consume larger income portions
• Potential default risks if employment or income situations deteriorate