Goodbye Generation Rent?

Last week saw Halifax release their latest mortgage figures.  According to their books, the 25-year mortgage is fast becoming a redundant product as first-time buyers shifted towards 30 or 35-year mortgage deals.  Since 2006, the percentage of first-time buyers taking out these extended mortgage terms deals has risen from a modest 11% to a mouth-watering 28%.

But this should come as no surprise.  With the average price of a house in London now over £400,000 (almost double that of the national average), scores of today’s first-time buyers will be paying off their home as they approach retirement or for many well into it.

This may be a price worth paying to break their Generation Rent tag. It seems even with Brexit and the political uncertainty going on across the pond, the Englishman’s home still seems to be his castle and today’s millennial will do anything to get one.

According to the same report, there were 335,750 first-time buyers in 2016, which is a now at a nine-year high, but this is still below the peak seen in 2006 where there were over 402k first-time buyers.

The housing market has been so important to the strength of the UK economy, but one thing we need to consider is the impact this longer debt burden will have on us and our quality of life.

Last year saw household bills hit a record high; increasing 10% according to and with students exiting university crippled by debt, what does that mean for consumer expenditure?

Well, if we use the recent round of UK car sales as a barometer then nothing.  Last year saw a record rise in UK car sales.  According to the Society of Motor Manufacturers and Traders, 2.7 million cars were registered in 2016, up 2% year-on-year (although predictions for 2017 are less positive).

Debt was once a dirty word, but it seems that we are all versed now with living a life of debt.  With well over 60 million credit cards in circulation and with UK credit card binging at a level not seen since 2008, UK consumers seem content to live the life they are accustomed to.

So it seems that when we are bored of living the Generation Rent lifestyle, we will simply walk straight into Generation Debt.


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