Forget Millennials — Gen Zs Are Old Enough to Buy a Home
NEW YORK – Generation Z is growing up. People born in or after 1995 are taking out more credit and increasingly eyeing homeownership – and they’re building their credit scores. About 14 million Gen Z consumers 18 or older are taking out credit – including some mortgages – according to the latest Q2 2019 Industry Insights Report from TransUnion.
“Both the newest and oldest members of the credit-eligible Gen Z generation are beginning to enter the credit market for the very first time,” says Matt Komos, vice president of research and consulting at TransUnion. “The rapid growth in Gen Z credit activity is occurring despite many of these individuals having grown up during the Great Recession. Though the recession itself landed less than two years, its impact was felt for several years afterward. As we see more members of this group come of age, we naturally expect continued growth in credit activity by Gen Z.”
While credit cards are the most popular forms of credit among Gen Z consumers, they’re increasingly taking out mortgages. Mortgages, in fact, had their largest year-over-year growth rate spike with Gen Z consumers, up 112%, according to TransUnion’s data – though that was from a previous low base. Mortgages are still the least likely credit product for Gen Z consumers; only 0.5% of mortgages are held by this age group.
That said, this generation overall is showing an eagerness to get into homeownership that’s higher than their predecessors at the same age.
More than half of Gen Zers aged between 18 to 23 say they are already saving for a home, and 59% say they plan to buy a home within the next five years – before they reach the age of 30, according to a separate study by Bank of America released earlier this year. In addition, 71% of nearly 2,000 people surveyed said they already know exactly what they want in their future home.
“It’s exciting to see Gen Z wanting to own a home for reasons like building their personal wealth over time,” says Steve Boland, head of consumer lending at Bank of America. “Despite their young age, this group is pragmatic and actively planning for their future. They recognize buying a home isn’t easy and have a clear vision not only about where they plan to get help but also how they are willing to help themselves in order to make it happen.”
Source: “As Gen Z Comes of Age, Credit Market Activity Shows Significant Growth,” TransUnion (Aug. 14, 2019)
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