Mortgage

Threat of higher mortgage rates likely to boost home purchase activity

Threat of higher mortgage rates likely to boost home purchase activity
Written by Publishing Team

Redfin found that nearly half of potential homebuyers in a recent survey would be likely to speed up their activities if mortgage rates reached 3.5%, but very few would cancel their plans.

The average 30-year mortgage has arrived 3.22% this week, the highest point since May 2020, according to Freddie Mac. By the end of this year, rates should be 3.6%, said Daryl Fairweather, chief economist at Redfin, which would make it less expensive to buy a home.

“Over time, this will put the brakes on demand and put an end to the double digits Annual price growthFairweather said in a press release. But in the short term, this increase will ignite a fire under home buyers and lead to competitor January.”

Of the 1,092 survey respondents who plan to buy a home in the next 12 months, 47% are likely to act with greater urgency to enter the housing market if rates continue to rise. 29% plan to either look at a less expensive location or consider purchasing a smaller home.

Postponing their activities and waiting for a drop in mortgage rates is the measure for 14%, but 7% said they would not change their plans. Only 2% would abandon a home buying decision in this scenario.

The survey was conducted for Redfin by Lucid between December 10 and 13.

In a separate December poll from Fannie Mae, 66% of consumers said now is a bad time to buy a home, up 2 percentage points. from november. The share that described this as a good time to buy slipped 3 percentage points to a record low of 26%.

“Among homeowners, ‘time to buy’ sentiment has fallen 30 percentage points over the past year to its current level of 30%; for renters, it’s down from 37% to 21%,” Fannie Mae chief economist Doug Duncan told the press. . Release of the latest indicator of home buying confidence. “Although demand remains strong, it is clear that the majority of consumers have reservations about buying a home at current prices.”

More than half of the respondents, 56%, said they expect mortgage rates to rise over the next 12 months, while 30% think they will stay the same. Expected rates may drop by only 4%.

The Fannie Mae National Housing Survey was conducted from December 1 through December 17.

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