A mortgage lender offers 100 percent mortgage and a little extra for furnishing the home, why not take it? This before the housing crash seemed like a fool-proof idea. House prices were continuously rising and real estate looked like a safe investment.
Then the housing market crashed. House prices dramatically dropped while unemployment rate was rising. Suddenly Generation X now has negative equity on a home. They’re owing more on a home than it’s actually worth. What do you do?
Generation Xers, classified being born between 1965 through 1984, had a majority out of a job or have had a huge pay cut and having negative equity on a home. Massive tax cuts and the expense of childcare has taken over the disposable income.
Living in a generation of spending culture, during the time of economic growth they did not think to save for retirement. Now with the years of no wage growth, no extra money to save. It does not look good for years to come.
Back then at the age of 28, the majority were owning a home then renting. According to Central Bank Data, some 100,000 mortgages are in negative equity. Now most people are renting until up to 35.
We see the dramatic increase of typical age to rent until. The millennials have seen the struggle from the past generation and the instability of the housing market and now are making sure they are ready to buy.
Now even with wage growth and the ability to trade up on a home it is more difficult for Generation X. For the millennial generation the Help-to-Buy scheme lets them borrow up to 90 percent of house value. If someone wants to trade up their house it’s 20 percent down payment.
Generation X is looking down on their future outlook. Two out of three in this generation do not see their future income prospects to improve. Many of them also without a set retirement plan.
Some advice is it is never too late to start saving. Even if you are in the Generation X and you want to trade up just start saving. A mortgage broker can help you find the perfect mortgage.
In reference to Generation X: Born at the wrong time, an entire generation struggles to survive by Fiona Reddan in the Irish Times on June 29, 2017.