A new report suggests older millennials have seen their liabilities balloon to record levels, which risks bringing spending to a halt.

The report from the Royal Bank of Canada, released last week, found older millennials faced a debt-to-disposable income ratio of 250 per cent in 2019, a rise of 100 percentage points from 1999, despite a decline in their homeownership rate.

“It’s always the case that the youngest generation is the most indebted, but now those levels have absolutely ballooned and going into a situation where we’ve seen interest rates rise so drastically,” Carrie Freestone, an economist with RBC and author of the report, told BNN Bloomberg in a television interview Wednesday.


The future doesn’t look all that bright either, as people with mortgages up for renewal could face a 25-per-cent climb in monthly payments due to the rise in interest rates. Meanwhile, average hourly incomes have only risen 12 per cent since the pandemic, the report said.

On the opposite end, baby boomers are less likely to feel the pinch from mortgage rates, as many have already paid off their homes. RBC found just 14 per cent of boomer households still have mortgage debt and that debt is significantly less than what the millennials face.


The debt millennials face can also hurt the economy, especially in the event of job losses, Freestone adds, as they are the generation that spends the most money.

“If you think about the generation that’s spending the greatest share of their take-home pay on discretionary goods and services, it is those middle-aged cohorts in their 30s and 40s,” she said.

“They spend much more than baby boomers who are maybe retired in their 60s. So if this is a group that’s facing higher interest costs, this is a group we could expect to see their consumption levels decline.”