According to the National Association of Realtors, the average age of first-time homebuyers is 36 years old, so for some of the millennial generation — generally regarded as individuals born between 1981 and 1996 — home ownership has become a top priority. Recently, however, the cost of homeownership has skyrocketed — in large part due to an adverse combination of high interest rates and scarce inventory, leaving millennials with a daunting homeownership outlook.
In order to cope with rising prices, millennials are taking out larger home loans. In 2022, the median loan amount for mortgages taken out by applicants aged 25–34 was $315,000, and it was $365,000 for applicants aged 35–44, higher than any other age group. Similarly, the loan-to-value ratio — or the amount of the mortgage compared to the sale price of the home — was 88% for 25- to 34-year-olds and 80% for 35- to 44-year-olds. Inherently, many millennials are first-time homebuyers and typically have less existing home equity to apply to new mortgages.
Despite the overall decline in home buying across the country, millennials still account for the majority of home purchase loans in 2022. An analysis from researchers at Construction Coverage, a website that provides construction insurance guides, found that millennials took out 58.3% of home purchase loans in Wisconsin last year, with a median loan amount of $245,000. Other key data from Wisconsin includes:
- The millennial share of home purchase loans was 58.3%;
- Total millennial home purchase loans equalled 32,841;
- The median loan amount was $245,000;
- The median loan-to-value ratio was 85.5%; and
- The median interest rate was 5%
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