While it doesn’t influence our opinions of products, we may receive compensation from partners whose offers appear here. We’re on your side, always. See our full advertiser disclosure.
It’s not a big secret that home prices have spiked in recent years. In fact, Zillow reports the median home value in the United States has grown by 20.7% over the past year to $349,816, an all-time high.
As you might expect, mortgage debt has grown as well. We recently got a look at the average American’s indebtedness, according to Experian, broken down by the type of debt as well as by generation. Here’s a look at what the average 30-something owes on their mortgage.
The Experian State of Credit 2021 report breaks down outstanding mortgage debt by generation, so let’s cover the numbers for the millennial generation. To be sure, millennials (also called Generation Y) are generally considered to be those born between 1981 and 1996 (ages 26-42), so this isn’t just people in their 30s. But it’s fair to say that millennials are likely to make up the bulk of first-time home buyers.
The average 30-something’s mortgage debt
As of 2021, the average millennial with a mortgage owed $255,527 in mortgage debt, according to the Experian report. This is up by 10% over the 2020 average and by 16% over 2019 levels. Given the rise in home prices, as well as the surge in refinancing (including cash-out refinancing) due to low mortgage rates throughout 2021, this certainly makes sense.
More on the economy:S&P 500, Dow and Nasdaq drop on recession fear, mortgage rates rise.
Faster, bigger Fed rate hikes:How they affect credit card, mortgage, savings rates and stocks
The average millennial owes 11% more on their mortgage than the average U.S. homeowner, and has the second-highest mortgage debt load, coming in just behind Generation X. This also makes sense – the baby boomer and silent generations have been in their homes longer on average, and therefore have had more time to pay down their loans. And while millennials are in their prime first-time buying years, Gen X (ages 42-57) are in the peak “move up” years, needing more space and amenities for their families.
Caveats to consider
There are a few caveats that make these numbers lower than you’re likely to pay on a new mortgage today. For one thing, they include people in these age groups who have owned their homes for several years. This means they bought when the median home price was significantly lower than it is today. It also means that homeowners included in these groups have had some time to pay down their principal balances (the original amount they borrowed).
For new borrowers, the average mortgage is far larger. In fact, the average purchase loan as of late June 2022 was $413,500, according to the Mortgage Bankers Association.
Inflation on the rise:Redfin and Compass lay off hundreds of workers as housing market cools, inflation spikes
It’s not just about your mortgage debt
One other important thing to mention is that mortgage rates have spiked, making homeownership more expensive for people who need to borrow money (which is most 30-somethings). In fact, the average 30-year fixed-rate mortgage interest rate has nearly doubled so far in 2022 alone. As a result, borrowers can expect a monthly principal and interest payment that is roughly 42% higher than it was at the start of the year for the exact same loan amount.
If you’re interested in buying a home, our guide to how much house you can afford can help you start tackling the numbers and learn more about the process. And our mortgage calculator may also help you figure out what interest rate and other details will work for your situation.
The Ascent’s best mortgage lender of 2022
Mortgage rates are on the rise – and fast. But they’re still relatively low by historical standards. So, if you want to take advantage of rates before they climb too high, you’ll want to find a lender who can help you secure the best rate possible.
That is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders).
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market.
Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Matthew Frankel, CFP® has positions in Zillow Group (C shares). The Motley Fool has positions in and recommends Zillow Group (A shares) and Zillow Group (C shares). The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.