Millennial millionaires are temporarily shelving big purchases as interest rates and inflation rise, according to the CNBC Millionaire Survey, according to the CNBC Millionaire Survey.
According to the survey, nearly half of millennial millionaires say higher borrowing costs are delaying their car purchase, and 44% say higher interest rates have caused them to delay buying a home. More than a third said inflation has caused them to delay a trip or vacation.
CNBC’s Millionaire Survey, which surveys people with investable assets of $1 million or more, shows that rising inflation and borrowing costs are impacting the wealth ladder. While inflation hit middle- and low-income groups hardest, rising interest rates are starting to stifle younger, affluent consumers, especially for big-ticket items. .
According to the survey, Millennials are more than three times more likely to cut big purchases than their child counterparts.
“Millennial millionaires are clearly dealing with something they’ve never experienced,” said George Walper, president of Spectrem Group, which conducted the survey with CNBC. “As a result, they are changing their behavior and spending plans.”
Spectrem Group and the survey consider respondents born in 1982 or older, who are now in their 40s or younger, as millennials. Respondents born between 1948 and 1965, ages 57 to 75, are considered baby boomers.
Inflation and rising rates have created two separate but related spending constraints on affluent consumers.
Inflation has pushed up the prices of luxuries like dining, airline tickets, hotels, and even some monthly subscriptions. According to the survey, 39% of millennial millionaires have cut back on eating out because of higher inflation. Thirty-six percent have cut back on vacations and 22% have cut back on driving.
At the same time, the Federal Reserve’s interest rate hikes have increased the cost of loans, especially for homes and cars. Central Bank on Wednesday increase its standard rate to the range of 1.5% -1.75% and said Another rally could come in July.
Two-thirds of millennial millionaires surveyed said they were “less likely to borrow money than a year ago” due to higher interest rates. That compares to just 40% for baby boomers.
Forty-four percent of millennials said higher rates have caused them to delay buying a new home, compared with just 6% of those who just had a baby. Nearly half of millennial millionaires say they are delaying car purchases because of higher rates – more than double the baby boom rate.
Millennials are often the main driver of sales growth for both homes and cars.
“Millennials, like everyone else, are seeing that the mortgages they looked at in January are now more than double,” says Walper.
CNBC’s millionaire survey was conducted in May, before the Fed’s latest rate hike. It surveyed about 750 respondents who reported that they were either financial decision makers or shared in financial decision making in their household.
Millennials, however, are more optimistic with their investments than older millionaires: 55% of millennials say inflation will last less than a year, compared with nearly two-thirds of millennials. baby boom said it will last at least a year or two. Forty percent of millennials surveyed plan to buy more stocks when inflation accelerates, compared with just 11% among boomers.
Millennials are also more optimistic about the impact of inflation on their stock returns: Nearly 90% of millennial respondents “believe” or “somewhat believe” in their ability to manage inflation Fed development – in stark contrast to 38% of child developers who are “not confident at all.”
More than 70% of millennial millionaires believe the economy will be stronger or even “much stronger” by the end of 2022, compared with two-thirds of boomers who say the economy will be weaker or “weaker.” much”. Millennials also said the asset market would end the year higher than 2021 levels – an upbeat sign of confidence with the S&P 500 index down 20% this year.
Fifty-eight percent of millennials say the year-end property market will grow at least 5%, with 39% expecting double-digit gains. In contrast, 44% of boom-bust millionaires expect the market to drop by double digits.