High mortgage rates have crippled the housing market, keeping buyers on the sidelines and potential sellers — some of whom are tied to low prices obtained during the pandemic — in their current homes. .
About two-thirds of potential home sellers said in a new poll from Credit Karma that they are willing to wait out the current market conditions that have worsened with mortgage rates consistently above 6 percent, while only a quarter said they would not be deterred by higher rates.
Of those who said they were willing to wait for mortgage rates to drop, 79 percent of Millennials said they would delay their plans.
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Homeowners who plan to sell within the next three years are willing to make sacrifices to avoid high prices, including staying in a smaller lot than needed space, delaying childbirth, and even continuing to live with a former spouse or partner.
“While it’s not surprising that homeowners are concerned about selling their home for fear of losing their low mortgage rate, there are other factors to consider beyond mortgage payments when deciding whether to when is the right time to sell,” Aniva Hinduja, general manager of home and mortgage at Credit Karma, said in a statement.
“For homeowners who aren’t happy with their current housing situation, it may not be worth it to continue to lower prices. If they are able to make the next home purchase while prices are where they are , there is a possibility of refinancing at a lower rate down the road,” added Hinduja.
Yet high mortgage rates, due in part to Federal Reserve interest rate hikes intended to curb inflation, deter older buyers less than younger buyers.
About 35 percent of baby boomers surveyed by Credit Karma said high mortgage rates would not affect their decision to sell.
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And among all generations whose decision will not be affected by mortgage rates, 46 percent say that will be the case because they will not need a mortgage on their new home.
Average 30-year fixed mortgage rates continued to rise after the Fed halted a series of rate hikes last month to assess the impact of previous increases—which reached their highest levels ever last November.
Data from Freddie Mac showed that the benchmark rate hit 6.96 percent this week, and economists said despite recent data showing cooling inflation, there are still unfavorable conditions affecting the market.
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“Incoming data suggest that inflation is softening, falling to the lowest annual rate in more than two years,” Freddie Mac Chief Economist Sam Khater said in a statement.
“However, the increase in housing costs, which accounts for a large part of inflation, remains stubbornly high, mainly due to low inventory relative to demand,” he concluded.
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