Older millennials are the age group most vulnerable to financial problems after taking on disproportionately large debts when interest rates were low.
Buyers in their late 30s took out the largest mortgages in the 2021-22 financial year and will be under the most pressure when they remortgage, according to Savills estate agents.
These buyers could be forced to sell up if their new repayments are unaffordable, which would accelerate house price falls, according to the Centre for Economics and Business Research think tank.
Buyers aged 35 to 39 bought properties with mortgages of £195,407 on average in the last financial year – larger than any other age group, Savills’ analysis of official data found.
Their deposits were 47pc of the purchase price, at £174,448 on average.
Buyers aged 30 to 34 took out the second-largest debts, at £187,389, while their deposits were worth an average of £136,254, or 42pc of the price paid.
By contrast, buyers over the age of 55, many of whom are downsizers, only took on an average mortgage of £68,109. They used large deposits of £287,531 to fund the bulk of their purchases.
Buyers in their late 20s had smaller loans and deposits compared with those in their 30s, at £186,223 and £74,006 respectively.
Lucian Cook, of Savills, said those in their 20s were more likely to purchase smaller flats or the most affordable properties they can find.
Buyers in their 30s are often choosing bigger properties to start families, which is why they are taking on more debt.
Mr Cook said: “They are now probably the most exposed to the increase in interest rates.”
He said buyers in their 30s have been the “bedrock of the housing market”, accounting for nearly a third of housing purchases in the 2021-22 financial year.
Buyers in their early 30s bought 172,987 homes – more than any other age group – while those in their late 30s bought 147,004 homes.
Mr Cook said many people in their 30s were first-time buyers, helped on to the property ladder by low interest rates and Government support schemes like Help to Buy.
First-time buyers using the Help to Buy scheme, which closed to new applications in October, bought new homes with a deposit of just 5pc, with the Government providing a loan of up to 20pc of the purchase price – 40pc in London – which was interest-free for five years.
Mr Cook said older millennials were now “more reliant than ever on the generations above to help them get on or trade up the housing ladder”.
He said young families are likely facing other cost pressures, like increasing childcare bills, which makes it even harder to cope with higher housing costs.
Older buyers also tend to spend less on properties than those in their 30s because they are downsizing, another factor that reduces their mortgage sizes. Some cash-rich older buyers are even avoiding mortgages altogether by buying properties outright.
Mr Cook said older buyers also represented a smaller proportion of transactions because of barriers like stamp duty tax, a lack of homes that are appropriate to their needs and an emotional attachment to family homes.
Kay Neufeld, of the Centre for Economics and Business Research, said huge mortgage debts were the key factor that made rising mortgage rates such a problem for younger people. Older generations were able to live with mortgage rates of over 10pc because they had much smaller loans.
Mr Neufeld said: “The mortgage rates that we’re seeing are not unprecedented, but people have taken on so much debt because house prices have risen so much. That’s why we’re seeing such a big impact on disposable incomes.”
He said there is a risk now that these older millennials could be forced to sell up if their new mortgage rates are unaffordable, which would “definitely lead to an acceleration of house price falls”.
House prices are already expected to fall 12pc this year, according to Oxford Economics, a research consultancy.