More than nine of every 10 U.S. homeowners with mortgages (91.8%) have an interest rate below 6%, according to a new report from Redfin (NASDAQ:RDFN). This is slightly below the record high of 92.9% hit in mid-2022.
Redfin also noted that 82.4% of mortgaged homeowners have a rate below 5%, 62% have a rate below 4% and 23.5% have a rate below 3%. Many homeowners have balked at the prospect of selling their properties and moving into a new home that would carry a mortgage in the higher end of the 6% range. As a result of this situation, pending home sales are down about 17% from one year ago.
“High mortgage rates are a double whammy because they’re discouraging both buyers and sellers–and they’re discouraging sellers so much that even the buyers who are out there are having trouble finding a place to buy,” said Redfin Deputy Chief Economist Taylor Marr. “The lock-in effect is unlikely to go away in the near future. Mortgage rates probably won’t drop below 6% before the end of the year, and most homeowners wouldn’t be motivated to sell unless rates dropped further. Some of them simply don’t want to take on a 6%-plus mortgage rate and some can’t afford to.”
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