5% Mortgage Rates Aren’t Scaring Buyers
February 13, 2018
Mortgage rates are inching higher, and most home buyers seem unfazed by it. Only 6 percent of prospective home buyers recently surveyed said they would stop their home search if mortgage rates rose above 5 percent, according to a new survey released by the real estate brokerage Redfin of more than 4,000 consumers.
Mortgage rates hovered below 4 percent at the end of 2017, but in January the average 30-year fixed-rate mortgage surpassed 4 percent. For the last five consecutive weeks, rates have been on the rise, with the 30-year mortgage rate averaging 4.32 percent in Freddie Mac’s most recent survey.
However, 27 percent of consumers who plan to buy a home in the coming year did say that a 5 percent mortgage rate would cause them to slow their plans to buy. A quarter of buyers said that an increase would have zero impact on their plans.
Higher rates may cause some buyers to rush their timelines. Twenty-one percent of potential buyers surveyed said that a rate bump to 5 percent would cause them to increase their urgency to buy. Another 21 percent said that such an increase would instead make them want to look in more affordable areas or to buy a smaller home.
Source: “Redfin Survey: Just 6% of Homebuyers Would Cancel Plans to Buy if Mortgage Rates Surpassed 5%,” Redfin (Feb. 12, 2018)
Updated: August 17, 2018