Almost half of potential homebuyers in a recent survey would likely step up their business if mortgage rates hit 3.5%, but few would cancel their plans, Redfin found.
30-year fixed-rate mortgage average reaches 3.22% this week, its highest point since May 2020, according to Freddie Mac. By the end of this year, rates are expected to reach 3.6%, which will make buying a home less affordable, said Daryl Fairweather, chief economist at Redfin.
“Over time, this will dampen demand and put an end to double-digit rates annual price growth“Fairweather said in a press release.” But in the short term, this increase will ignite a fire under buyers and create a competitive January.”
Of the 1,092 survey respondents who plan to buy a home in the next 12 months, 47% would likely act more urgently to enter the housing market if rates continued to rise. Another 29% would consider either looking for a cheaper location or considering purchasing a smaller home.
Delaying their business and waiting for mortgage rates to drop is the 14% action, but 7% said they would not change their plans. Only 2% would abandon the decision to buy a home in this scenario.
The survey was conducted for Redfin by Lucid between December 10 and 13.
In another survey conducted in December by Fannie Mae, 66% of consumers said now is the wrong time to buy a home, up 2 percentage points. from November. The stock that called it a good time to buy fell 3 percentage points to a record low of 26%.
“Among homeowners, ‘right time to buy’ sentiment has fallen 30 percentage points over the past year to its current level of 30%; for renters it has fallen from 37% to 21% “Doug Duncan, chief economist for Fannie Mae,” said in the press. publication of the latest home buying sentiment index. “Even though demand remains strong, a majority of consumers clearly have reservations about buying a home at current prices.”
More than half of those polled, 56%, said they expected mortgage rates to rise in the next 12 months, while 30% believed they would stay the same. The forecast rates of just 4% could go down.
The Fannie Mae National Housing Survey was conducted from December 1 to 17.