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Rising Mortgage Rates Have Some Buyers Hitting Pause

by Kelly Leighton on

As mortgage rates continue to climb after hitting historic lows, some homebuyers are putting their search on the backburner.

According to a recent report from Forbes, 34% of buyers in a survey said they are putting their search on pause, 32% are not applying for a mortgage now and 12% are not going to refinance. Comparatively, 22% said rising rates have not impacted their previous plans. More than 40% of respondents said they would not go for a mortgage rate between 4% to 5%, while 27% said if rates reach 6% to 7%, they will not apply. Fourteen percent said 8% is their limit. For the week ending May 20, the Mortgage Bankers Association reported that mortgage applications were down 75% year over year. The 30-year fixed rate was at 5.46% for that week.

Eighty-five percent of respondents believe mortgages will continue to rise, with 27% predicting in the next three to six months and 37% predicting rates will increase in six months to a year. For those who were planning to buy a home, 27% said they are waiting and 26% are pivoting to renting instead.

Despite these challenges, some homebuyers are undeterred. Seventy-two percent are still planning to buy. More than half (55%) said the high interest rate does not matter to them, as long as they are approved for a mortgage and 17% would make sacrifices to afford a higher rate. Twelve percent would shop around to try and find a lower rate.

For those current homeowners looking to refinance, 33% said a 5% rate would stop them, 13% said a 6% and 11% said a 7% or more. However, 29% would stop at 4%.

Topics

Buyers Mortgage rates
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