The survey revealed that millennials are the least likely to understand mortgage rates (26%). The study examines mortgage, renting, and homeownership trends and preferences across generations.
Millennials were also found to prefer 30-year mortgage terms, along with generation-Xers. The survey found a generational variation in mortgage length preferences, as baby boomers were found to prefer 15-year terms. American Financing said older generations, as expected, prefer to and are able to pay off debt more quickly than younger generations.
A majority of each generation preferred a 10% down payment, according to the study. Across all generations, 53% preferred the 10% down payment over 15%, 20%, or 30% down payments. American Funding said that while the lowest option may appear intuitive to consumer, the data suggests that other factors that affect home costs are neglected.
The survey further found that 77% of baby boomers are homeowners. The figure goes down for generation-Xers at 49% and even lower for millennials at 24%. Meanwhile, 54% of millennials are renters, compared to 39% of generation-Xers and 20% of baby boomers.
Additionally, the study found that prospective home buyers who were married are more likely to have a timeline of one to two years (37%). Prospective home buyers who were single were more likely to have an ideal timeline of five years to buy a house (41%).
Affordability, competition issues pose roadblocks to millennial homeownership
Homeownership declines in importance among Americans’ priorities
While a slight majority of potential homebuyers (56%) pay attention to mortgage rates, almost a quarter of Americans (23%) do not understand how rates work, according to the inaugural Mortgages in America Survey released by American Financing.