Most homeowners across the county have a mortgage rate well below the current average for a 30-year fixed rate mortgage, according to a new report.
Close to 90 percent of owners have a mortgage rate below 6 percent, the report from real estate brokerage Redfin showed. And nearly one-quarter have mortgage rates below 3 percent.
This has prompted many buyers and sellers to stay put in their current homes.
“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 Taylor Marr, Redfin deputy chief economist.
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“The lock-in effect is unlikely to go away in the near future,” Marr continued. “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.”
The benchmark mortgage rate has fluctuated widely over the past 15 months during the Federal Reserve’s aggressive battle with inflation.
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After reaching historic lows early in the pandemic, rates shot up to more than 7 percent last fall, and they have hovered at or above 6 percent since.
But the central bank pressed pause on its series of rate hikes earlier this week after inflation data showed further signs of cooling, which could offer a little relief to prospective buyers.
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Freddie Mac data released following the Fed’s meeting showed that the 30-year fixed rate mortgage dropped slightly to 6.69 percent.
“As inflation continues to decelerate, economic growth is slowing and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next,” Freddie Mac Chief Economist Sam Khater said in a statement.