{"id":7142,"date":"2023-09-05T20:38:43","date_gmt":"2023-09-05T20:38:43","guid":{"rendered":"https:\/\/prosfunds.com\/news\/mortgage-rate-tipping-point-homeowners-say-roughly-5-is-the-magic-number-to-move\/"},"modified":"2023-09-05T20:38:45","modified_gmt":"2023-09-05T20:38:45","slug":"mortgage-rate-tipping-point-homeowners-say-roughly-5-is-the-magic-number-to-move","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=7142","title":{"rendered":"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move"},"content":{"rendered":"
<\/span><\/p>\n
\n
\n
\n
\n
<\/span><\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n

After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many homeowners to consider selling.<\/p>\n

At today’s rates, most homeowners would need to finance a new home at a higher rate than the rate they currently hold, adding hundreds of dollars a month to their mortgage payment. That has created an incentive to stay where they are.<\/p>\n

“Even if they bought a cheaper house, their payments would go up,” said Nicole Bachaud, a senior economist at Zillow.<\/p>\n

“These existing homeowners either can’t or are unwilling to sell their home because they can’t afford a mortgage on a new home,” Bachaud said.<\/p>\n

More from Personal Finance:<\/strong>
More unmarried couples are buying homes together
Some costly financial surprises for first-time homebuyers
61% of adults live paycheck to paycheck<\/p>\n

But there is a tipping point, recent reports found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to Zillow, and 71% of prospective homebuyers who plan to purchase their next home with a mortgage said they would not accept a rate above 5.5% \u2014 that is the “magic mortgage rate,” according to a survey by John Burns Research and Consulting.<\/p>\n<\/div>\n

Higher interest rates created a ‘golden handcuff’ effect<\/h2>\n
\n

Since it’s unlikely rates will drop anytime soon, this has created a so-called golden handcuff effect. Similar to the financial incentives employers may offer to discourage employees from leaving a company, homeowners are now bound by their low mortgage rate.\u00a0<\/p>\n

Most homeowners today have mortgages with interest rates below 4% or even below 3%, after moving or refinancing when rates hit record lows during\u00a0the Covid pandemic.<\/p>\n

Currently, there is “a stock of people sitting on very cheap mortgages,” said Tomas Philipson, a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers.\u00a0<\/p>\n

Nearly 82% of home shoppers said they felt “locked in” by their existing low-rate mortgage, according to a separate survey by Realtor.com.<\/p>\n<\/div>\n

\n

Bob Wood, 66, has been thinking of selling his home in Mobile, Alabama. The finance professor and his wife, Terri, purchased the 5,000-square-foot house with a pool nearly a decade ago.<\/p>\n

“It’s probably time to downsize,” he recently told CNBC. They would also like to be closer to their grandchildren in Tennessee.<\/p>\n

And yet, “we are in the 10th year of a 3.125% 15-year fixed mortgage,” he said.\u00a0They\u00a0don’t want to move\u00a0now and give up that low rate to buy at a higher rate. “We just don’t want to pay that much in interest,” he said.<\/p>\n

Wood said he’d be more likely to move if rates came down to “the 4%-5% range.”<\/p>\n

“The reality of it is, until inflation comes down in a meaningful and sustainable way, mortgage rates are going to stay high,” said Greg McBride, Bankrate’s chief financial analyst.\u00a0<\/p>\n

Because of that, there is a critical shortage of homes for sale, with year-to-date new listings roughly 20% behind last year’s pace, which is also putting more pressure on prices.<\/p>\n<\/div>\n

Rates may not drop below 3% ‘anytime soon \u2014 if ever’<\/h2>\n
\n

“In many ways, we’re in uncharted territory right now,” said Jacob Channel, senior economist at LendingTree.<\/p>\n

Between 1978 and 1981, mortgage rates similarly doubled from around 9% to more than 18%, compelling more homeowners to hold on to their homes.<\/p>\n

However, “mortgage rates weren’t at record lows in the late ’70s before they started to skyrocket in the early ’80s, nor did home prices increase as rapidly,” Channel said.<\/p>\n<\/div>\n

\n

But if history is any guide, “there is a good chance the housing market will eventually pick up steam again like it has in the past,” he added.<\/p>\n

“While mortgage rates may not return to sub-3% levels again anytime soon \u2014 if ever \u2014 there’s no reason to think that they’ll stay as high as they currently are forever,” Channel said.<\/p>\n

“Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes,” said Sam Khater, Freddie Mac’s chief economist.<\/p>\n

Subscribe to CNBC on YouTube.<\/strong><\/em><\/p>\n<\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many homeowners to consider selling. At today’s rates, most homeowners would need to finance a new home at a higher rate than the rate they currently hold, adding […]<\/p>\n","protected":false},"author":1,"featured_media":7143,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[38],"tags":[],"class_list":{"0":"post-7142","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"\nMortgage rate tipping point: Homeowners say roughly 5% is the magic number to move | Prosfunds<\/title>\n<meta name=\"description\" content=\"After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/prosfunds.com\/?p=7142\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move | Prosfunds\" \/>\n<meta property=\"og:description\" content=\"After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many\" \/>\n<meta property=\"og:url\" content=\"https:\/\/prosfunds.com\/?p=7142\" \/>\n<meta property=\"og:site_name\" content=\"Prosfunds\" \/>\n<meta property=\"article:published_time\" content=\"2023-09-05T20:38:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-09-05T20:38:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/09\/107271158-1689261479199-gettyimages-1529791870-AFP_33P23JR.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/prosfunds.com\/?p=7142#article\",\"isPartOf\":{\"@id\":\"https:\/\/prosfunds.com\/?p=7142\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/prosfunds.com\/#\/schema\/person\/bab8f1b00ccebe43e39ff640793108e6\"},\"headline\":\"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move\",\"datePublished\":\"2023-09-05T20:38:43+00:00\",\"dateModified\":\"2023-09-05T20:38:45+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/prosfunds.com\/?p=7142\"},\"wordCount\":718,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/prosfunds.com\/#organization\"},\"articleSection\":[\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/prosfunds.com\/?p=7142#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/prosfunds.com\/?p=7142\",\"url\":\"https:\/\/prosfunds.com\/?p=7142\",\"name\":\"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move | Prosfunds\",\"isPartOf\":{\"@id\":\"https:\/\/prosfunds.com\/#website\"},\"datePublished\":\"2023-09-05T20:38:43+00:00\",\"dateModified\":\"2023-09-05T20:38:45+00:00\",\"description\":\"After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many\",\"breadcrumb\":{\"@id\":\"https:\/\/prosfunds.com\/?p=7142#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/prosfunds.com\/?p=7142\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/prosfunds.com\/?p=7142#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/prosfunds.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/prosfunds.com\/#website\",\"url\":\"https:\/\/prosfunds.com\/\",\"name\":\"Funding Factories\",\"description\":\"Latest Finance News and Updates\",\"publisher\":{\"@id\":\"https:\/\/prosfunds.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/prosfunds.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/prosfunds.com\/#organization\",\"name\":\"Funding Factories\",\"url\":\"https:\/\/prosfunds.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/prosfunds.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png\",\"contentUrl\":\"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png\",\"width\":780,\"height\":140,\"caption\":\"Funding Factories\"},\"image\":{\"@id\":\"https:\/\/prosfunds.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/prosfunds.com\/#\/schema\/person\/bab8f1b00ccebe43e39ff640793108e6\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/prosfunds.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png\",\"contentUrl\":\"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/prosfunds.com\"],\"url\":\"https:\/\/prosfunds.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move | Prosfunds","description":"After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/prosfunds.com\/?p=7142","og_locale":"en_US","og_type":"article","og_title":"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move | Prosfunds","og_description":"After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many","og_url":"https:\/\/prosfunds.com\/?p=7142","og_site_name":"Prosfunds","article_published_time":"2023-09-05T20:38:43+00:00","article_modified_time":"2023-09-05T20:38:45+00:00","og_image":[{"width":1920,"height":1080,"url":"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/09\/107271158-1689261479199-gettyimages-1529791870-AFP_33P23JR.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/prosfunds.com\/?p=7142#article","isPartOf":{"@id":"https:\/\/prosfunds.com\/?p=7142"},"author":{"name":"News Room","@id":"https:\/\/prosfunds.com\/#\/schema\/person\/bab8f1b00ccebe43e39ff640793108e6"},"headline":"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move","datePublished":"2023-09-05T20:38:43+00:00","dateModified":"2023-09-05T20:38:45+00:00","mainEntityOfPage":{"@id":"https:\/\/prosfunds.com\/?p=7142"},"wordCount":718,"commentCount":0,"publisher":{"@id":"https:\/\/prosfunds.com\/#organization"},"articleSection":["News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/prosfunds.com\/?p=7142#respond"]}]},{"@type":"WebPage","@id":"https:\/\/prosfunds.com\/?p=7142","url":"https:\/\/prosfunds.com\/?p=7142","name":"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move | Prosfunds","isPartOf":{"@id":"https:\/\/prosfunds.com\/#website"},"datePublished":"2023-09-05T20:38:43+00:00","dateModified":"2023-09-05T20:38:45+00:00","description":"After bottoming out below 3% in January 2021, the average rate for a 30-year, fixed-rate mortgage now sits above 7% \u2014 which is just too high for many","breadcrumb":{"@id":"https:\/\/prosfunds.com\/?p=7142#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/prosfunds.com\/?p=7142"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/prosfunds.com\/?p=7142#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/prosfunds.com\/"},{"@type":"ListItem","position":2,"name":"Mortgage rate tipping point: Homeowners say roughly 5% is the magic number to move"}]},{"@type":"WebSite","@id":"https:\/\/prosfunds.com\/#website","url":"https:\/\/prosfunds.com\/","name":"Funding Factories","description":"Latest Finance News and Updates","publisher":{"@id":"https:\/\/prosfunds.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/prosfunds.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/prosfunds.com\/#organization","name":"Funding Factories","url":"https:\/\/prosfunds.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/prosfunds.com\/#\/schema\/logo\/image\/","url":"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png","contentUrl":"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png","width":780,"height":140,"caption":"Funding Factories"},"image":{"@id":"https:\/\/prosfunds.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/prosfunds.com\/#\/schema\/person\/bab8f1b00ccebe43e39ff640793108e6","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/prosfunds.com\/#\/schema\/person\/image\/","url":"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png","contentUrl":"https:\/\/prosfunds.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png","caption":"News Room"},"sameAs":["https:\/\/prosfunds.com"],"url":"https:\/\/prosfunds.com\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/posts\/7142","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prosfunds.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7142"}],"version-history":[{"count":1,"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/posts\/7142\/revisions"}],"predecessor-version":[{"id":7144,"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/posts\/7142\/revisions\/7144"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/prosfunds.com\/index.php?rest_route=\/wp\/v2\/media\/7143"}],"wp:attachment":[{"href":"https:\/\/prosfunds.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prosfunds.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7142"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prosfunds.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}