Why Homeowners Can’t Move — How Low Borrowing Costs Could Hurt You
Written by
Nicole Spector
Edited by
Cory Dudak
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One of the biggest problems in today’s housing market is the inventory shortage, with demand far outstripping supply. Factoring into this problem is the fact that many homeowners don’t want to give up the low interest rates they locked in with their current homes.
As Paulina Cachero put it for Bloomberg, homeowners are stuck in a holding pattern. If they put their home on the market, they may get more than what they paid for it, but they’ll also be cornered into purchasing a new home at a higher rate. According to data compiled by Credible and reported by Fox Business, these are current mortgage rates as of Aug. 11:
- 30-year fixed mortgage rates: 8.000%
- 20-year fixed mortgage rates: 8.125%
- 15-year fixed mortgage rates: 6.125%
- 10-year fixed mortgage rates: 6.125%
Ninety percent of U.S. homeowners with mortgages have an interest rate below 6%, according to a June report from Redfin Corp. Therefore, even those who want to move may feel stuck in place right now, knowing potential savings could be curbed by current towering interest rates.
The burning question not only for prospective buyers but also prospective sellers is, “When will mortgage rates go down?“
It doesn’t look like that will be anytime soon. According to the latest monthly Housing Forecast from Fannie Mae published in July, the average 30-year fixed rate will be at 6.8% during Q3 2023 and nudge down to 6.6% by the end of the year. Mortgage rates aren’t expected to creep below 6% until Q4 2024.
So what should homeowners itching to sell do until interest rates cool down? Unfortunately, they may have to do what so many hopeful homebuyers are forced to do: wait it out.
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