What are the long term consequences of the two and three percent mortgage rates of 2020-2021? Many homeowners feel locked into their current home, unable to up and leave because they would give up their low mortgage rate and pay today’s prevailing seven percent rates. Approximately eighty-two percent of home buyers feel locked into their current low mortgage rate, according to a REALTOR.com survey cited in a CNBC article.*
“Even if they bought a cheaper house, their payments would go up,” said Nicole Bachaud, a senior economist at Zillow. “These existing homeowners either can’t or are unwilling to sell their home because they can’t afford a mortgage on a new home.” What would be the tipping point? Reports show that a 5.5% mortgage rate would make homeowners excited to move again. Five and a half percent is the magic number that would make homes start to list and generate activity in the market.
KALEO agents don’t set the Federal Fund Rates, they don’t set the mortgage rates, they respond to their clients when they need to buy or sell a home. KALEO agents are the facilitators of a real estate transaction — Agents jump into the stress and give you a guidebook for how to list and buy simultaneously, accomplish a move out of state, or sell the family home after your parents passed away.
One thing to consider is that if the majority of homeowners would be more likely to sell if rates went down, then it is also logical that lower mortgage rates would bring in an influx of first time home buyers. Having more buyers increases competition unless there is a huge increase in inventory.