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The Federal Bank’s Interest Rate: Gen Z’s Current Biggest Concern

With the presidential election approaching and more eligible Gen Z voters than ever to participate, many wonder what Gen Z’s biggest concern is. A recent survey by Redfin found that about 91% of adult Gen Zers marked housing affordability as the most important factor in their vote,  compared to other issues they were asked about, and rightfully so. 

Currently, the key interest rate—the rate that determines bank lending rates and the cost of credit for borrowers—is around 5.33%, the highest rate following the 11 rate increases from 2022 to 2023. This rate has remained since 2022. While the inflation rates have lowered, they are still higher than what the Federal Bank would like. As a consequence, mortgage rates are on the rise. The rates on 30-year mortgages, the most common kind, have crossed 7%, signaling trouble for the already tight housing market. Additionally, as of June, other mortgages, such as home-equity lines of credit and adjustable-rate ones, have a rate of 9.18% and 8.6%, respectively. This illustrates that the housing market has barred average citizens from becoming homeowners, especially for Gen Zers entering the workforce. These numbers give Gen Zers a gloomy look at the future; the dream of homeownership is becoming more and more unobtainable by the year. 

Experts claim that keeping interest rates at this high level is necessary for lower inflation rates as high interest rates are the most effective tool against high inflation. Additionally, many economists claim that higher rates are generally a good thing so long as they’re associated with growth. Others have also noted that higher interest rates benefit savers as the average savings yield is almost 10 times higher than the average yield before the Federal Bank began to increase rates. However, with high interest rates, economists have observed a stagnant housing market. According to the National Association of Realtors, the sales of existing homes fell by 4.3% in March of this year and 3.7% from last year. These lower sales are a result of the high mortgage rates, which push house prices higher as homeowners become hesitant to sell. 

For Gen Z, it is increasingly concerning that the interest rate has stayed at this high level. It is important to note that there are many other viable actions against inflation than simply shifting the interest rate. Many economists agree that reducing overall government spending aids in lowering demand-produced inflation, which is becoming the case in the housing market. Furthermore, government deregulation of energy, housing and other markets also helps to reduce inflation as it lowers the cost of domestic production, leading to lower prices. These solutions depend much on the action of Congress to supplement the Federal Bank’s actions. Moreover, local governments can reform zoning laws to allow for higher-density housing, meaning more apartment spaces that can provide affordable housing for Gen Zers. 

It must be emphasized that Gen Z will face huge financial setbacks not present in other generations, and it is the government’s responsibility to offer support. There must be a call to action to illustrate the dire situation Gen Z faces and make a change for a better future. 

Acknowledgment: The opinions expressed in this article are those of the individual author.


Awesome piece Anny. It is very interesting to see that this Gen Z' housing crisis is also present in other countries. In Canada, the situation is also very similar. Even a student found out living with their parents and taking the plane to go to their classes was more affordable than living in Vancouver! Thank you for your piece, it truly sheds lights on the issue.


Hi Anny, I love that we are bringing awareness to the difficulty gen Z is experiencing in the house market. So many different factors set us back as becoming home owners including the lack of action from our government to address issues regarding the housing market. Last week I submitted a piece that looked into the role private equity firms play in the competitive market and the disadvantage regular home buyers have because we must borrow money from banks with interest rates to afford single family homes while investors just pool money for investments and rent them to Gen Z at profitable and often ridiculously high rates. I think one of the most important legislative stances law makers can take…


Great piece, Anny. Gen Z is paying the price for roughly 15 years of "easy money" policies after the crash of 2008. Despite the Fed repeatedly stating that inflation is "transitory", reality has panned out differently. High interest rates are here to stay, for a while, and Gen Z will pay the price while those who were fortunate enough to borrow and invest at very low interest rates over the last decade and a half sit comfortably on their fortunes.


Hi, Anny,

I agree that housing is a large issue facing the current generation. Many of your solutions do, in fact, seem plausible. However, there is one housing issue I feel you failed to address. A lot of people agree that the rising housing prices are because companies are buying them and then renting them out at exorbitant prices. If congress were to also do something about that, though, I think your plan would work.

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