June 20, 2022: -According to CNBC, millennial millionaires are shelving major purchases as interest rates and inflation increase.
According to the survey, almost half of millennial millionaires say higher costs cause them to delay buying a car, and 44% say higher interest rates are causing them to delay purchasing a home. Over a third said inflation has caused them to wait for a trip or vacation.
The CNBC Millionaire Survey surveys those with investible assets of $1 million, suggesting that inflation and growing borrowing costs are working their way up the wealth ladder. While inflation reaches the middle- and lower-income groups hardest, that increases interest rates art to squeeze more affluent and young consumers, especially for big-ticket items.
According to the survey, millennials are three times more likely to be cutting back on big purchases than their baby boomer counterparts.
“The millennial millionaires are dealing with something they’ve never experienced,” said George Walper, president of Spectrem Group, which surveys with CNBC.
Inflation and increasing rates have created two separate but related spending constraints for affluent consumers.
Inflation has increased the prices of luxuries such as dining out, plane tickets, hotels, and even certain subscriptions every month. According to the survey, 39% of millennial millionaires have cut back on dining out as of higher inflation.
Thirty-six percent are cutting back on vacations, and 22% have cut down on driving.
Similarly, the Federal Reserve’s interest rate hikes have jacked up the cost of borrowing for homes and cars. On Wednesday, the central bank raised its benchmark rate to 1.5%-1.75% and told another hike could come in July.
Two-thirds of millennial millionaires surveyed said they are “less likely than a year ago to borrow money” due to higher interest rates. That compares with just 40% for baby boomers.
Forty-four percent of millennial respondents said higher rates have caused them to delay purchasing a recent home, compared with only 6% of baby boomers. Almost half of the millennial millionaires said they are slowing buying a car because of higher rates, more than double the rate of baby boomers.
“Millennials, like everyone else, are seeing that the mortgages they were looking at in January are more than twice as much,” Walper said.