78%
of Gen Z homebuyers would cut lifestyle spending to afford a home
40%
of Gen Z future homebuyers are waiting on a specific mortgage rates to buy
46%
of recent homebuyers said purchase decisions are driven by life events
Buyers are renegotiating the terms of homebuying line by line, and the order they bend in tells you exactly what they're trying to protect. Cotality's consumer sentiment survey data has some surprises, particularly when it comes to Gen Z.
Introduction
.svg)
For a second or two, a David Beckham free kick often looked like a bad idea. The ball left his right foot and drifted towards some patch of air where useful things rarely happen. But then the unexpected happened. The ball would bend its trajectory mid-air, and the goalkeeper was left with the miserable job of turning to pick it out of the net. Homebuyers in 2026 are doing something similar. The straight lines are gone, the property ladder is steeper than in previous generations. Access feels too steep — prices, rates, deposits, everything. So, they are strategically bending. They’re cutting costs, taking smaller loans, and buying smaller homes, all in service of getting to a monthly payment number that, for many of them, feels just out of reach.
This report is about that moment: the buyer calculating the curved kick that gets them to a house they can actually afford. It is based on a survey of homebuyers across five markets — the United States, Canada, the United Kingdom, Australia, and New Zealand — split between recent buyers (purchase within the past five years) and future buyers (intending to purchase within two years).
Across all five of those markets, buyers are adapting, sacrificing, and, in many cases, finding a way through. Speed still matters, but certainty — certainty that the effort will end with house keys in hand — carries the most weight.
Buyers have outlined boundaries. Those boundaries are the commercial signals that tell lenders, brokers, insurers, and platforms exactly where people are in the mortgage application process, and what it would take to move them. The chapters that follow show how the calculation works, where it breaks, and what the institution or individual who aligns the variables correctly can do differently from the one that is still waiting for rates to fall.
The magic number
What are most homebuyers looking for?
The housing industry is looking for a signal that sidelined homebuyers are finally ready to act. In the United States, Canada, the United Kingdom, Australia, and New Zealand, buyers say that signal is an interest rate.
While there are nuances across markets, our latest research uncovered the "magic numbers" that would compel one in four prospective buyers to re-enter the market .
But knowing that rate is only half the battle. Buyers have an interest rate that would persuade them to participate in the housing market:
In New Zealand that number is 4.9%.
That’s the median rate, and every one of the five countries Cotality surveyed came up with its number. While there are variations, the message is clear: buyers believe that a lower interest rate will make the homeownership ladder possible.
The interest rates that move buyers
Data source: Cotality Consumer Sentiment Survey, Q2 2026
People across markets are weighing a mortgage against household budgets already under strain. Their named rate is the point where the monthly payment starts to feel workable, after everything else has been accounted for. The risk is that the number buyers want may sit below what the market can realistically deliver soon.
Indeed, bending the market to such a low interest rate may be more of a Hail Mary hope than a strategy for homeownership, particularly in markets where today’s interest rates are much higher than the aspirational numbers expressed by survey respondents.
Despite saying they want lower interest rates, Cotality data reveals that buyers are still making the mathematics work. Excluding a contraction in originations when rates jumped nearly three percentage points between 2022 and 2023, the total number of mortgage originations has climbed every year.
A separate view of application activity shows how closely demand follows the rate curve. Applications surged when mortgage rates fell below 4% in 2020 and 2021, then dropped sharply as rates moved above 6% from 2022. Although rates have eased from their peak, application volumes remain well below pre-2022 levels as affordability pressures and weaker refinance incentives continue to weigh on demand.
The data shows that while people have an ideal rate that makes a mortgage comfortable, they are willing to be flexible to realise the dream of homeownership. But each generation bends differently.
A match made from memories
Gen Z has a different answer to what makes for a good interest rate on a house.
The youngest buyers are willing to stretch up to 6% the highest threshold of any generation.
At first glance, that sounds wrong. The group with the least savings and the most exposure to rate risk should, by any logical reading, be the hardest to move. But Gen Z has never borrowed money at 3%. The 2% to 3% window that anchors older buyers' sense of what a mortgage “should” cost is not a memory for them; it is, at best, a history lesson. They have built their expectations around a world where rates are high, and the threshold for Gen Z home ownership reflects that.
But the rates borrowers actually secure are much closer together than those generational memories might suggest. Gen Z borrowers tend to pay slightly higher rates, but differences between age cohorts are generally less than 0.2 percentage points and small beside the much larger shifts in mortgage rates over time.
Millennials, the cohort naming the lowest ideal rate, carry a different memory of the market. Many came of age as buyers during the low-rate years, and their threshold reflects that history. Yet their behaviour tells a less nostalgic story. Even with rates elevated, Millennials are still taking out the largest number of loans in the U.S. Cotality data shows lenders wrote 3.1% more Millennial loans in 2025 than in 2023, despite 2025 opening with rates at 6.9%, compared with 6.5% at the start of 2023.
That increase is small but suggests some buyers are mortgaging their expectations and lifestyles to make ownership work, rather than waiting for the market to bend all the way back to the rates they would prefer.
Shifting signals
What is significant beyond the interest rate people want is what has changed while they’re waiting for it to arrive. Among recent buyers, the thing that most convinced them to stop browsing and start applying were life events such as a baby on the way, or a job offer in another city. In other words, life pushed them into the market, and they took whatever rate was available at the time.
Future buyers are different. Thirty percent of those buyers are looking for a specific interest rate as their signal, compared with 20% of recent buyers.
What buyers say will get them off the bench
Data source: Cotality Consumer Sentiment Survey, Q2 2026
The sticking point is timing. A rate in the 4% range may not arrive soon, particularly in the U.S. A buyer who waits another year for that number may save on the monthly mortgage payment, but lose more in rent, delayed equity and a longer path to ownership.
“It’s expensive to buy a home. But so is renting,” says Cotality’s Chief Economist Selma Hepp who explains that over the long run, homeowners come out ahead. “Older generations know this. 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.”
Here’s what it looks like:
A buyer who rents another year at $2,000 while waiting for the interest rate to drop is signing away thousands of dollars. On a $300,000 loan over 30 years, even a 6% interest rate is effectively cheaper when you include tax benefits and equity accumulation. Every year, a buyer gets about a month of rent returned to them in equity. Over 10 years, the savings stacks up to nearly $24,000, and that’s if a buyer never refinances, moves, or changes circumstances long before then. Most will take the next step on the homebuying ladder, and they’ll do so using the equity they amassed. The lender who can show the impact of that calculation on mortgage affordability, before anyone else does, gives the buyer something better than a rate quote: a clear decision.
Across all five markets, 30% of future buyers say a specific interest rate would move them from browsing to applying. That is a practical signal for lenders. Nearly a third of future buyers have named the point at which they may act, and some are close enough for a structured buydown or lender credit to make the numbers work.
The signal is stronger among younger buyers. Cotality loan origination data shows they are still pushing into the market despite higher rates. They may prefer a lower rate, but their behaviour shows a willingness to bend the loan, the home and the lifestyle around it to make ownership possible.
Buyers who are under 25 were the most resilient shoppers; they are also the ones who said they'll move at higher rates. Cotality data shows that when rates started to climb in 2022, participation from the youngest buyers dropped nearly 10 percentage points less than other cohorts.
Through three straight years of rates above 6.5%, this group’s market participation continued to climb as everyone else held almost perfectly flat.
It is the clearest picture in the data of a cohort waiting for a signal before taking aim. Buyers are saying what they need to move forward. For the rate-sensitive buyers the survey describes, that signal is a lower interest rate, but maybe not as low as they’d like. Forward-looking lenders who are optimising for long-term growth now have a path laid for them to tap into a generation that is finding a path to their goal and has said it will remain loyal to the lender that guides them.
The trade-offs buyers will make
People are running the numbers trying to make homeownership possible, they just aren’t adding up. Many are asking, “Is there a way to lower your mortgage payment without refinancing?” Others are forging a path forward — paying the mortgage at the expense of their lifestyle.
People say what they value, but their choices say it more plainly. It turns out, the last thing they want to be flexible about is their home.
For those running a multi-country portfolio, the headline finding is that adaptation is highest where affordability pressure is highest, and reluctance to adapt is highest where housing has already been compressed.
The mortgage calculator.
Cotality's survey asked homebuyers what they are doing, or planning to do, about the rising cost of homeownership and its subsequent effects on mortgage affordability. The pattern in their answers is unambiguous and consistent from Savannah to Sydney. When pressure builds, buyers try to protect their homes by cutting the life around it.
Where they are least inclined to cut is their willingness to take a smaller mortgage (65%) or buy a smaller home (59%).
The sacrifice ladder goes lifestyle and time first, structure of the deal second, structure of the house last.
Climbing the sacrifice ladder
Data source: Cotality Consumer Sentiment Survey, Q2 2026
That ordering tells us that buyers are protecting the asset itself. To keep the home, its size, its location, its long-term value, they are adjusting around it. The house is the load-bearing wall while everything else is the wallpaper.
The direction is the same in every market: people who want to own a home are doing more with less. Buyers are also increasingly cutting their initial investment, shouldering mortgage insurance and a larger overall price tag in order to balance competing costs.
These two quotes describe the same instinct in two different markets. Both the Australian and UK buyers kept the deposit smaller to protect liquidity. What looks on paper like a financially sub-optimal choice — paying more interest over the life of the loan — is in fact a decision about which kind of certainty matters more. The certainty of having cash on hand outranked the certainty of a lower monthly payment. Both buyers are choosing, deliberately, what they can control.
Some are even looking elsewhere when it comes to location. Twenty-eight percent of recent buyers moved to a different area in search of more affordable housing. Among those affordability movers, 17% crossed into a different state, territory, region, county, or equivalent market boundary.
The generational fault line of Gen Z homeownership
The angle tightens even more when we split the data by generation. The pattern is so consistent across five markets that it functions almost as a control variable: whatever the country, the younger the buyer, the further they will bend.
Gen Z buyers are doing more of everything. Across all five markets, 78% will cut lifestyle spending. Eighty-two percent will pause the search or take a smaller mortgage. Seventy-four percent will look at smaller homes. They don’t appear to be giving up, but they have clearly decided to wait and recalibrate their approach.
The Gen Z buyer clearly has the calculator app on their mobile phone home screen, but they are also the cohort most likely to be triggered by a specific interest rate rather than a personal life event. They are watching, calculating, and ready to buy a house for the first time.
The other end of the generational spectrum tells a different story. Baby Boomer buyers are the least willing to bend on every measure surveyed. Fifty percent said they would cut lifestyle spending, compared to 78% of Gen Z. Forty-three percent would buy a smaller home, against 74%. Forty-one percent would take a smaller mortgage, against 82%. The differences are big, and they hold in every market surveyed.
There are two reasons for this generational split.
The first is that many Baby Boomers are not financing in the way younger buyers are. A meaningful share of Baby Boomer respondents across all markets are downsizing, paying more in cash, or moving sale proceeds from one home directly into another. They are not in the mortgage queue in the same way.
The second reason is that Baby Boomers, having lived through earlier rate cycles, are pickier about the terms on which they enter the market again. They will wait it out before they will compromise.
The Gen X squeeze
In between sits Gen X, and this is the cohort some industries tend to forget because, despite sitting in their peak earning years, they are also at peak obligation: kids in university, ageing parents, a mortgage already running, two cars in the driveway, retirement savings they are watching nervously. They are willing to bend, but not by as much as the cohort beneath them.
Sixty-nine percent said they would cut lifestyle. Sixty-two percent would take a smaller mortgage or pause the search. Fifty-seven percent would buy a smaller home. Their flexibility is well above Baby Boomer reluctance but well below Gen Z elasticity.
"I am trying to work extra hours so I can put more down and finance less so I can afford the payment better." Gen X, Future buyer, U.S.
That quote captures the Gen X position with brutal clarity. They are working more, rather than pausing, or downsizing.
This cohort has very little discretionary time and almost no patience for friction. The Gen Z buyer will tolerate a six-stage application process because they are watching the rate. The Gen X buyer will tolerate it only if every stage is visibly moving, and they do not have to chase anyone.
Where are buyers trimming lifestyle costs the most?
The trade-off pattern holds in every market surveyed, but the geographic willingness to bend is not evenly distributed.
- UK: UK buyers are the most reluctant to give ground. Forty-two percent have considered or would consider buying a smaller home (against 59% survey-wide), 53% would take a smaller mortgage (against 65%), and 59% would cut lifestyle spending (against 69%). The UK figures are not because British buyers are wealthier or less squeezed; they are not. They likely reflect a market where homes are already smaller, deposits are already larger, and lifestyle has already been compressed closer to the bone. There is less margin left to give.
- Australia: Australia sits near the top on lifestyle cutting, with 75% willing to reduce spending. It reflects an affordability gap that has been widening for years. That gap means that those who will cut the most are generally the same ones with the least room left to cut.
- New Zealand: New Zealand leads on willingness to take out a smaller-mortgage at 68% and lifestyle cutting (78%). It is, broadly, the most adaptive of the five markets.
- Canada: Canada sits closer to the cross-market average on willingness to take a smaller mortgage (66%) and slightly higher than average on willingness to buy a smaller home (68%, the highest of any market). The Canadian buyer is more willing to compromise on the structure of the house itself, perhaps reflecting a sharper recent rise in metropolitan property prices relative to incomes.
- U.S.: The U.S. sits in the middle of every measure. American buyers are more willing to bend than UK buyers but slightly less than Australians or New Zealanders. They have more room to move than the British and less acute pressure than the Australasian markets. The U.S. is the median of the broader story.
The generational game plan
For those running a multi-country portfolio, the headline finding is that adaptation is highest where affordability pressure is highest, and reluctance to adapt is highest where housing has already been compressed.
- Gen Z: The Gen Z buyer is calculating, patient, and rate-sensitive. They have built a life that absorbs the wait. The lender who reaches them with rate-monitoring tools, clear explanations of buydown options, and education on how a structured product can move them off the sidelines is having the right conversation.
- Millennials: Millennials are among the largest cohort of buyers and those willing to adapt across the board. They have already cut lifestyle, they will take the smaller mortgage, they are pre-positioned to act. What they need is information — clear, fast, jargon-free, and proactive — when their rate threshold is crossed. The lender who maintains an active customer-watch list and reaches out when the numbers move first wins.
- Gen X: Gen X needs friction removed, not promises made. They are time-poor and sceptical. They are also at peak earning power, which makes them the most profitable cohort to convert when you get the process right. Invest in visible progress, single points of contact, and proactive updates. Speed of communication matters more than speed of approval.
- Baby Boomers: This generation is having a unique conversation with lenders. They are not in origination pipelines at the volumes the other cohorts are. The opportunity with Baby Boomers is a reverse mortgage, a refinance into smaller properties, and structured cash deals. The lender who builds dedicated products for the downsizing Boomer — and treats them as a wealth-management conversation rather than an origination conversation — is the one that retains the relationship as they exit traditional ownership.
The trade-off ladder, in other words, is also a segmentation ladder. Each generation is willing to give up a different combination of lifestyle, home size, and loan size. Every cohort said they will bend on the lifestyle, loan, and house. But there are some areas where they stand firm even when cracks are starting to show.
The bend, the break, and what comes next
The data in Cotality’s report points to one answer with unusual clarity. The buyer in 2026 is not waiting to be sold to. Nor are they paralysed or waiting for the market to come back and offer record-low interest rates. They are bending, deliberately, and they have told us — in numbers — exactly where the bend stops.
The calculation is different for every generation and every country. But everyone has a number at which they say they will come back.
What people say though, isn’t always how they behave. People recognise that their ideal interest rate is a reality that is likely years off in some countries, and homeownership cannot always be put on hold. Enter the sacrifice ladder as people look for ways to enter the market even at higher rates. Buyers across all five markets are climbing in roughly the same order:
- Cut the life around the home
- Reduce the debt
- Shrink the property
- Redraw the search area
There is a finite number of sacrifices that buyers can make. It may be the Federal Housing Administration (FHA) borrower in Phoenix who has run out of cushion. It may be the lender who failed to pick up the phone when the buyer most needed them to.
The institutions that do well will be the ones that sell certainty, not speed alone. Across the markets surveyed, 71% of buyers choose certainty when asked to pick between certainty and speed. They want clear costs, a clear reason for the rate they are offered, a clear path to close and a lender who is still there when they need help in 12 months. The product is the mortgage. The promise is certainty.
Buyers have clearly laid out their game plan. They’ve said what they want as well as what they will, and will not, do to make it happen. Their thresholds, priorities, and breaking points are now numbers the industry can act on.
The cohorts doing the most bending — Gen Z, the first-time buyer, the high loan-to-value borrower — are also the cohorts most willing to commit to a lender who treats them well. Fifty-six percent of Gen Z buyers describe themselves as True Loyal. The generation that the industry has sometimes ignored is, by their own description, the generation most willing to stay.
The question now is whether we can read what buyers are telling us and respond before they move on. The lenders who reach them with proactive service, clear calculations, and a credible promise of certainty will own the next era of mortgage origination.
