Despite the still-challenging interest rate environment, some homeowners may choose to forego lower interest rates and move, one research organization says. red fin study.
Nationally, the proportion of homeowners with relatively low interest rates has fallen slightly from a record high of 92.8% in mid-2022. In the third quarter of 2023, 88.5% of U.S. homeowners with mortgages had interest rates below 6%.
To do this studyRedfin analyzed data from. Federal Housing Finance AgencyNational Mortgage Database (as of Q3 2023).
Many homeowners choose to sell because of major life events such as marriage, childbirth, employment, divorce, etc. Some people simply want to move to another home or city. Another reason why the percentage of homeowners with relatively low interest rates has declined is that some homeowners’ interest rates exceed her 6%. The average mortgage rate for repeat buyers and first-time buyers who entered the market in 2022 was more than 6%. Now that interest rates are lower, it makes sense for them to take out a new mortgage.
The lock-in effect still exists, but the number of listings is starting to increase
Lower mortgage rates appear to have helped inventory conditions some. The average interest rate on a 30-year fixed-rate mortgage was 6.66% as of January 11, down from a peak of about 8% in October.
“This is typical for January, with sellers really starting to move in as mortgage rates have dropped,” David Palmer, a Redfin Premier real estate agent in Seattle, said in a statement. “They are also coming to terms with the fact that interest rates are not going to go back to 3% anytime soon, which makes it easier to trigger a sale. But the number of properties is increasing. No, there is still a housing shortage and many sellers are worried about finding their next home. That’s part of the reason why so many sellers are on the sidelines.”
Of course, there is a group of homeowners who have enough equity to justify selling their homes and taking out large mortgages. As prices soared during the pandemic, many homeowners made big profits on their purchases. If a homeowner wants to downsize or move to a more affordable area, it may make more sense to take out a new mortgage now. As of Q3 2023, 88.5% of U.S. homeowners with mortgages had interest rates below 6%, 78.7% with interest rates below 5%, 59.4% with interest rates below 4%, and 22.6% with interest rates below 3%. It has become.
Affordability remains an issue even if mortgage rates are on the decline
For the four weeks ending January 7, 2023, the monthly payment for a median-priced U.S. home with an average mortgage rate of 6.62% is $2,399. This figure is down $325 from its all-time high in 2022, but is still up 7.4% from a year ago. Overall, mortgage rates and home prices are both higher than last year.
