Gen Z buyers willing to cut spending, accept higher rates 

From high housing costs to elevated gas and grocery prices, consumers today are facing affordability pressures on multiple fronts.

But when it comes to prioritizing a home purchase, one generation — perhaps due to their upbringing during challenging financial times — seems more willing than others to buckle down on spending to afford a home: Gen Z.

According to Cotality's Consumer Sentiment Report released on Sept. 23, 78% of Gen Z homebuyers would be willing to curb their lifestyle spending in order to afford a home, compared to 77% of millennials, 69% of Gen Xers and 50% of baby boomers. The report is based on Cotality's proprietary datasets and on a Q2 2026 survey of buyers located in the U.S., Canada, the U.K., Australia and New Zealand.

What motivates today's buyers

Buyers appear to have fairly specific numbers in mind when considering what will move them off the sidelines to transact.

In the U.S., Cotality pegged buyers' "magic" mortgage interest rate at a median of 4.6%. But even though rates are now well above that level, buyers continue to find ways to make the math work, with mortgage originations increasing every year (with the exception of a 2022 to 2023 contraction, when rates surged nearly 3 percentage points).

Gen Zers were most willing to sacrifice on interest rates. These buyers would be open to transacting at a median interest rate of 4.9% — higher than millennials (4.6%), Gen Xers (4.5%) and baby boomers (3.9%).

Still, hitting a specific interest rate was the top motivation cited among future and recent Gen Z buyers. But as Cotality Chief Economist Selma Hepp warned, those who continue holding out for a rate in the 4% range may end up sacrificing on other fronts since rental expenses add up over time — and sometimes exceed buying expenses.

"Older generations know this," Hepp said in the report. "Millennial buyers, who are the largest cohort of homebuyers, have not experienced a sustained higher-rate environment, which can distort their expectations. Ultimately, it comes down to limited experience — but that lack of experience can be costly."

In terms of what drives those who do transact, nearly half of all recent buyers (46%) said personal life events motivated them to purchase a home while 1 in 5 were motivated by a specific mortgage rate, 19% had wanted to save a specific amount for a down payment and 14% had sought a specific monthly payment amount.

Willing to consider trade-offs

Buyers across the countries and generations surveyed largely agreed that it would be worth making lifestyle sacrifices to balance out the rising costs associated with homeownership.

Consumers were most willing to cut their lifestyle spending (69% of all survey respondents) or put their home search on hold (also 69%) to deal with high costs, Cotality found. But when these responses were broken down by generation, an additional 9% of Gen Zers and an additional 8% of millennials were willing to cut their lifestyle spending, while another 13% of Gen Zers and another 5% of millennials were open to pausing their search.

Many consumers also indicated a willingness to compromise on the size of their mortgage and the type of home they would buy. Of everyone surveyed, 65% said they would seek a smaller mortgage to secure lower monthly payments while 59% said they'd look for a lower-priced or smaller home.

Here again, Gen Z emerged as the generation most open to being flexible. Cotality's data showed 78% of Gen Zers would cut their lifestyle spending, 82% would pause their home search or take out a smaller mortgage, and 74% would consider purchasing a smaller home.

Craving certainty

Although many buyers indicated a willingness to adjust and compromise to keep their prospects as a homeowner secure, they also want certainty — something lenders would do well to understand.

Over two-thirds of survey respondents (71%) said they prefer certainty over speed when choosing a lender. Buyers want transparency about the costs involved in their mortgage, Cotality found, and want to know that they can depend on their lender.

"The lenders who reach them with proactive service, clear calculations, and a credible promise of certainty will own the next era of mortgage origination," the report said.