Millennials and Gen Z are gambling on a big mortgage-rate drop, using ARMs and refinancing. But that could be a 'financial ticking time bomb'

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• Mortgage rates have remained elevated since 2023 and home prices are at record highs, locking out many millennials and Gen Z buyers from the housing market. A significant portion of younger homebuyers are betting on future rate drops by taking on adjustable-rate mortgages or planning to refinance, but experts warn this is an unreliable gamble.

Mortgage rates have remained stubbornly high since 2023—which has been duly painful as many homeowners recall the sub-3% rates during the pandemic. Combined with historically high home prices, droves of would-be homeowners have been locked out of the housing market, many of which are millennials and Gen Z.