fbpx

Millennials Worry Less About Using Their Home Equity

14% of millennials would use home equity for a vacation compared to 3% of boomers. But 64% of boomers would tap it for home improvements, compared to 49% of millennials.

NEW YORK – A recent Bankrate.com survey reveals that 14% of millennial (ages 25 to 40) mortgage holders would tap into their home equity to bankroll a vacation, compared with just 4% of Generation X (ages 41 to 56) and 3% of baby boomers (ages 57 to 75).

Additionally, 10% of millennials would pull cash from their homes to pay for non-essential purchases, such as electronics or a boat – but just 3% of Gen Xers and boomers would.

On the other hand, older generations are more willing to use equity to improve the house that generated it. While only 49% of millennials would tap equity for home improvements, 64% of Generation X and 66% of boomers consider that a reasonable use of the money.

Part of the generation gap is tied to ultra-low mortgage rates. Baby boomers lived through 30-year mortgage rates topping 18% in the early 1980s, while Gen Xers experienced rates hovering at 9% in the 1990s. Millennials barely remember 5% rates. From Jan. 1, 2010, to Jan. 1, 2020, the average rate on a 30-year loan was just above 4%.

Part of the reason also relates to a stage of life, and Gen X and boomer answers may be different if they were surveyed 30 years ago.

Experts say millennials aren’t thinking about retirement and building up their wealth. Many are focused on living their lives rather than saving for a distant future.

An additional factor: Millennials are buying in a time when home values continue to rise, with the latest S&P CoreLogic Case-Shiller home price index reporting that home values jumped 19.7% from July 2020 to July 2021 across the country. They may have difficulty imagining a world where home values don’t increase at a rapid pace, even though the Great Recession’s downward push on home values occurred just over a decade ago.

Today, according to mortgage data firm Black Knight, Americans had more than $9.1 trillion in “tappable” home equity as of mid-2021.

Source: RISMedia (10/12/21) Ostrowski, Jeff

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

http://feedproxy.google.com/~r/floridarealtors/~3/4Zv0nbAlMNw/millennials-worry-less-about-using-their-home-equity