Rising mortgage rates push under-45s to delay homeownership
The dream of homeownership is slipping further out of reach for younger generations in the UK, as a surge in private renting among under-45s highlights the growing financial challenges first-time buyers face in the current high-interest-rate environment.
New figures from the English Housing Survey reveal that renters under the age of 45 are now the primary drivers of growth in the private rented sector, paying a record £56.2 billion in rent in 2024 — an increase of £3.5 billion from the previous year.
Data shows that under-45s accounted for two-thirds (66%) of all rent paid in Great Britain in 2024, up from 64% in 2023, marking a return to pre-pandemic levels. Over the past year, the number of younger renters grew by 149,000 to a total of 3.4 million, reflecting a shift away from homeownership among this group due to the impact of rising borrowing costs.
Between 2013/14 and 2023/24, younger households benefited from government-backed homeownership schemes, such as Help to Buy, alongside historically low interest rates. During this period, the number of renters under 45 dropped slightly by 1%, even as the population grew.
However, higher mortgage rates have reversed this trajectory, with younger households now delaying homeownership. The increase in under-45 renters over the past year is equivalent to 40% of the total households that purchased homes through Help to Buy over the last decade.
“Higher mortgage rates have clipped the wings of many young aspiring homeowners in the last couple of years, meaning Millennials increasingly outnumber older generations in the rental market,” commented Aneisha Beveridge (pictured), head of research at Hamptons. “Just like rapidly rising house prices, higher interest rates will keep younger generations of tenants renting for longer.”
In contrast, older renters (aged 45 and above) saw their numbers decline by 79,000 in the last 12 months, with many in this group using savings to purchase homes despite elevated interest rates. Collectively, over-45s paid £716 million less in rent in 2024 than the previous year.
However, over the past decade, the amount of rent paid by this age group nearly doubled, rising from £14.7 billion in 2013/14 to £29.1 billion in 2023/24. This growth reflects both rising rents and the financial challenges faced by older renters locked out of homeownership due to stricter lending criteria implemented after the financial crisis.
“The record rise in the number of younger renters over the last year highlights the impact of higher mortgage rates and the need for a similar scheme to Help to Buy if the government wants to achieve its ambition to help more people become homeowners,” Beveridge said.
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