Monday, January 24, 2022 / by Ken Couture
Nearly half (47%) of homebuyers recently surveyed said they would feel more pressure to buy a home if mortgage rates rose above 3.5%, according to a new consumer survey from Redfin.
Mortgage interest rates are largely expected to continue to rise in the coming months. As reported by Freddie Mac, last week, the 30-year fixed-rate mortgage hit its highest average since May 2020, averaging 3.22%. The National Association of Realtors® predicts that mortgage rates will average 3.7% by the end of the year.
Buyers surveyed say that increasing mortgage rates will also have an impact on the type of home they decide to buy. 29% of buyers say that if mortgage rates rise above 3.5%, they will change their target area to buy a home and look for a smaller home.
Just 7% of 1,500 homebuyers surveyed said they wouldn't change their plans if mortgage rates rose above 3.5%, according to a Redfin survey. Only 2% will cancel their home purchase plan entirely if rates rise beyond this level.
“Rising mortgage rates will make home purchases less attractive,” said Daryl Fairweather, chief economist at Redfin. “Over time, this should reduce demand and end double-digit year-over-year price growth. But in the short term, this increase will fan the flames of homebuyers and make January extremely competitive. »
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