In the research note released on Monday titled “An uneven housing market: older millennials feeling the hit,” BofA said that younger millennials are escaping the worst of the pain.

“In our view, this is because older millennials (ages 35-45) face a bigger financial burden,” the bank continued. “For example, this group has the biggest share of outstanding student loans, according to the Department of Education, and is seeing the fastest rise in credit card delinquencies, according to the New York Fed.” 

Take Jacob Fuerst, a 40-year-old dad who’s right in the middle of BofA’s range. He has already bought and sold three houses, but he told Fortune he can’t manage to do that a fourth time in this housing market. He and his wife moved to New Hampshire with their two kids and two dogs, only to realize they’d have to rent, even though they have savings. In Jacob’s case, it wasn’t student loans or credit card debt keeping him out of the market, but rather childcare costs, rent, and utilities that made it nearly impossible to save up enough money for a down payment. “I’ve worked my entire life. I’m not asking for the moon,” Fuerst told Fortune in early November. “I should be able to afford a house that is big enough for my family.”

Or take Emily Blake, a 45-year-old living in Los Angeles with her partner. They feel trapped in her rent-controlled apartment after local home prices skyrocketed. They had thought about buying a house before affordability plummeted, but then it was too late. Her partner has student loans, which makes it harder for them to save, given that they’re already living paycheck to paycheck, she told Fortune. “I don’t see how we’ll ever afford a house. The prices just keep going up,” Blake said in late October, unless they were to move out of the city or change careers. 

A lot of people are struggling with unaffordable housing costs, but older millennials seem to be taking the brunt of the blow.

Rising borrowing costs

This year’s housing market, which is estimated to be the least affordable since the 1980s, is marked with mortgage rates that have more than doubled from their pandemic lows after home prices rose substantially during a housing boom. The housing market has become so unaffordable that rent was cheaper than mortgages in all but two of 97 major metropolitan areas, according to a separate BofA analysis. 

All millennials are affected by rising borrowing costs because they’re more likely to take on a mortgage when buying a home, rather than older generations that can put down all-cash offers. Citing Federal Reserve data, Bank of America compared the average boomer and Gen X household net worth to the median existing home sales price—those were $1.8 million and $1.2 million, respectively, compared to around $400,000. “In contrast, the average millennial household only has a net worth of around $200,000, lower than the median home sales price and just one-ninth of the net worth of the average baby boomer household,” the bank said.

However, younger millennials, those 28 to 35 years old, are seeing stronger growth in escrow payments than their older counterparts, according to the note. The investment bank says there are a few reasons why. For one, younger millennials are just entering their prime homebuying years, so the larger increase in escrow payments likely comes from a lower base point (versus older millennials, who started years earlier). As housing affordability began to plummet last year, older millennials experienced the biggest pullback in the year-over-year growth rate of escrow payments. “In fact, the number of older millennial households with an escrow payment in October 2023 was down 2% YoY, in line with that of baby boomers and lower than that of Gen X,” the bank said. 

And older millennials just carry more debt. The older members of the generation, and some Gen Xers, hold 40% of the $1.6 trillion in outstanding student debt. Additionally, credit card delinquencies are increasing at the fastest pace for those ages 30 to 39. Although that includes younger and older millennials, the bank said, “it speaks to the general trend in the latter.” 

Older millennials, the bank noted, also likely have greater expenses than younger millennials; case in point, childcare costs. According to BofA internal data, average childcare payments have risen over 30% since 2019. 

The legacy of 2008

“Last but not least, the older millennial cohort is more likely to have been hit harder by the 2008 housing crisis, which potentially set them back financially relative to younger millennials,” Bank of America said, without elaborating further. 

In a previous research note, BofA strategists explained that baby boomers benefited from a great wealth transfer from the public to private sector—and they’d won the housing market. Despite largely entering the housing market in the 1980s, when mortgage rates were extremely high (peaking at roughly 18%), baby boomers have had several years to refinance, allowing them to lock in low rates. 

“Everyone locked in 3% mortgage rates, except millennials,” the bank previously said. “On the cost side, most boomers locked in low mortgage rates, where the effective mortgage rate remains below pre-COVID levels. The only group that took out mortgage debt meaningfully since 2021 is millennials, seeing a 20% jump.” Mortgage rates have fallen in recent weeks because of better-than-expected economic data after hitting just above 8% in October; the latest average 30-year fixed mortgage rate reading came in at 7.11%. It’s possible that mortgage rates will continue to fall, although it’s unlikely that they’ll return to around 3%, at least not in the near future. Moody’s Analytics’ chief economist, Mark Zandi, recently said that he expects mortgage rates to settle at 5.5% to 6% in the long run. Goldman Sachs, on the other hand, forecast that mortgage rates could remain elevated, falling to just below 7% by the end of next year.