According to CNBC's Millionaire Survey, young millionaires are putting off major purchases as interest rates and inflation go up.
According to the survey, more than half of young millionaires say higher borrowing costs are causing them to delay buying a car and more than a third say higher interest rates are causing them to delay buying a home. Inflation has caused people to delay a trip.
The CNBC Millionaire survey shows that inflation and rising borrowing costs are helping people get to the top of the wealth ladder. While inflation hits the middle-class and lower-income groups hardest, rising interest rates are starting to squeeze more affluent, younger consumers.
According to the survey, the baby boomers are more likely to be cutting back on big purchases than the young people.
George Walper, president of Spectrem Group, which conducts the survey with CNBC, said that the younger generation of millionaires are dealing with something they have never experienced. They are changing how they spend their money.
Those who were born in 1982 or later are considered to be a part of the new generation of people. Baby boomers were born between 1948 and 1965, and ranged in age from 57 to 75.
Spending constraints for affluent consumers have been created by inflation and rates.
The prices of luxuries have gone up due to inflation. 39% of young millionaires have cut back on dining out because of inflation. Thirty-six percent of people have cut back on vacations.
The cost of borrowing has gone up as a result of the Federal Reserve raising interest rates. On Wednesday, the central bank raised its benchmark rate to a range of 1.5%-1.75% and said it could raise it again in July.
The survey found that two-thirds of millionaires are less likely to borrow money because of higher interest rates. For baby boomers, only 40% is comparable.
Forty-four percent of young people said higher rates have caused them to delay buying a home, compared with only six percent of boomers. The rate of delay in buying a car is more than double that of baby boomers.
Sales of homes and cars tend to grow with the number of young people in them.
The mortgages that young people were looking at in January were more than twice as much as they are now.
CNBC conducted a survey before the Fed hiked its rates. Approximately 750 respondents said that they are the financial decision-makers in their household.
Almost two-thirds of baby boomers think inflation will last at least a year, but only 45% of the younger generation think it will last less than a year. Forty percent of the young people surveyed plan to buy more stock as inflation increases.
Baby boomers are less confident in the Fed's ability to manage inflation than the younger generation.
More than 70% of young people think the economy will be stronger at the end of the year, compared with less than half of boomers. The S&P 500 is down 20% for the year so far, but young people say asset markets will end the year higher than 2021.
Fifty-eight percent of millionaires think asset markets will go up at least 5% by the end of the year. Millionaire boomers expect the market to decline in value.
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