What’s the holdup with homebuying? In large part, it’s mortgage rates, according to the latest Real Financial Progress Index from BMO Financial Group, the eighth-largest bank in North America by assets.
Among Gen Z and Millennial renters who plan to buy homes, most said they are holding out for lower interest rates — 69% and 74%, respectively. Yet, the idea of a “starter home” is getting somewhat outdated: 66% of Gen Zers and 61% of Millennials say it doesn't make sense to them to buy small and upgrade later. Instead, they want to wait and try to buy a forever home.
BMO’s index was launched in February 2021, and the research for it was conducted by Ipsos in the from March 3-26, 2025. The index polled some 2,500 U.S. adults ages 18 and older.
While two out of three Americans say owning a home is a major life aspiration, nearly as many — 61% — also report feeling less confident about their ability to buy now than they did five years ago. The lack of confidence is especially pronounced among Millennials and Gen Zers, according to the index.
“Many younger buyers feel like they missed their moment,” said Paul Dilda, head of U.S. consumer strategy at BMO. “But the dream is still alive.”
In addition, competing financial priorities are delaying home purchases. For non-homeowners with kids, 57% say education or childcare costs outweigh the goal of buying a home. Gen Zers are more likely to prioritize buying a car, while Millennials are more focused on saving for retirement.
“The financial hurdles to owning a home have rarely been higher.” —BMO Chief U.S. Economist Scott Anderson
Over half of young homeowners say family support was essential to their landing a home. Six out of 10 Gen Zers and nearly as many, 57%, of Millennials report they couldn’t have made the big purchase without financial help.
And when family support isn’t enough, a bit of purchasing creativity might help fill the gap. A majority of Gen Z (57%) and Millennials (54%) say they would consider “co-buying” with friends or non-romantic partners in order to afford a home.
Fixer-Uppers, Flexibility Gain Appeal
Although fewer would-be homebuyers want a "starter home," the idea of a “fixer-upper” home is gaining traction, especially among younger generations: 63% of Gen Zers and 65% of Millennials and Gen Xers say they would consider buying a home that needs renovations. In another significant finding, 56% of Gen Z and 63% of Millennials say they would consider relocating to another state — or even another country — to be able to afford homeownership.
Meanwhile, risk factors like climate events and rising homeowner insurance costs are playing a larger role in decision-making. Nearly half of Americans overall say climate risks will influence where they live, with Gen Z (65%) and Millennials (55%) leading that trend, according to BMO’s index.
Implications For Lenders And Housing Professionals
For mortgage professionals, the findings suggest a growing need to offer more flexible solutions, first-time buyer education, and guidance on family-assisted financing. In their vein, BMO noted it offers programs such as “Welcome Home Grant” or tools that simplify budgeting and down payment planning.
“The financial hurdles to owning a home have rarely been higher,” said Scott Anderson, BMO’s chief U.S. economist. “But conditions can change quickly — and early planning gives younger buyers a fighting chance.”
