Inman-Dig Insights’ latest consumer survey results show that homeowners with mortgage rates of at least 5 percent are three times more likely to enter the market than those with mortgage rates below 3.5 percent.
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Homeowners with mortgage rates above 5% three times more likely Those countries reporting rates below 3.5% Strong willingness to enter the domestic market over the next 12 months, according to an extensive survey conducted by Intel.
Inman-Dig Insights’ consumer survey confirms that the so-called “rate lock” effect is very real and has implications for the entire real estate market and the brokerage industry’s transition to a new business landscape.
It also provides a series of nuanced insights into how mortgage rates affect various customers’ attitudes toward their current homes.
The survey, conducted in early April, interviewed 3,000 employed U.S. consumers, including 1,172 homeowners with mortgages, who shared details about current loan rates.
Intel is particularly interested in this group.
After confirming the existence of the rate-lock effect, Intel began exploring its contours and limitations and determining how the next wave of brokerage clients might consider working with agents following the NAR settlement.
Explore Intel’s findings in the full report below.
Sellers are locked in – but how tight?
For this analysis, Intel looked at three different, similarly sized tiers of survey respondents:
- Homeowners with mortgage rates above 5%
- Homeowners with mortgage rates between 3.5% and 5%
- Homeowners with mortgage rates below 3.5%
About a third of respondents at each level have a mortgage. To better understand how mortgage rates affect consumer attitudes, Intel excluded renters and consumers who own their homes outright from the analysis.
Segmenting consumers in this way yields an immediate conclusion: Homeowners with higher interest rates are more interested in participating in the housing market in the coming months.
And homeowners with ultra-low interest rates early in the pandemic had little interest in entering the market.
Percentage of homeowners who say they are “very likely” to buy a home in the next 12 months, by mortgage rate bracket:
- A rate exceeding 5%—— 20% “Very likely” to buy
- 3.5%-5% interest rate— 13% “Very likely” to buy
- Interest rates below 3.5%— 7% “Very likely” to buy
Percent of homeowners who say they are “unlikely” to buy a home in the next 12 months, by mortgage rate bracket:
- A rate exceeding 5%—— 43% “Unlikely” to buy
- 3.5%-5% interest rate— 45% “Unlikely” to buy
- Interest rates below 3.5%— 54% “Unlikely” to buy
It is obvious that the current loan interest rate of the upper group is closest to the current market interest rate, and their purchasing enthusiasm is significantly higher than that of the other two groups.
But enthusiasm aside, second-tier consumers – homeowners with mortgage rates between 3.5% and 5% – are not particularly averse to buying.
Only the last layer, sitting on the ultra-low interest rates in the early stages of the epidemic, shows a pure “lock-in” mentality.
- 19% of homeowners with mortgage rates below 3.5% say they are at least likely to buy a home in the next 12 months.
- In comparison 34% More than 5% of homeowners say they are at least likely to buy soon, and 28% People in the middle gave the same response.
A flexible group
Each of these three groups contains a variety of different household characteristics, making it sometimes difficult to draw conclusions about the likely direction of the housing market from them.
For example, income distribution is similar across all three tiers, with members ranging from the financially strapped to the high-income.
Still, there is one area where the two groups are clearly different: Households with higher mortgage rates are more susceptible to NAR settlement news and are more likely to favor certain ways of dealing with real estate agents.
Share of homeowners with mortgages who had heard about NAR settlements in early April, by mortgage rate bracket:
- A rate exceeding 5%—— 38% Get to know the settlement
- 3.5%-5% interest rate— 27% Get to know the settlement
- Interest rates below 3.5%— twenty three% Get to know the settlement
We have established that homeowners with higher interest rates are more likely to follow the market, so greater familiarity with NAR litigation should come as no surprise.
But potential sellers with this higher rate are also more likely to have a positive impression of the new post-closing landscape and how they will profit.
Percentage of homeowners with mortgages who have heard about the NAR settlement and believe it is “good for consumers” but bad for the housing industry, by mortgage rate bracket:
- A rate exceeding 5%—— 48% Say it’s good for consumers
- 3.5%-5% interest rate— 39% Say it’s good for consumers
- Interest rates below 3.5%— 43% Say it’s good for consumers
Percent of mortgaged homeowners who have heard about the NAR settlement and think it will be “neither good” for consumers nor the housing industry (by mortgage rate bracket):
- A rate exceeding 5%—— 7% Said it would be unhelpful to both parties
- 3.5%-5% interest rate— 14% Said it would be unhelpful to both parties
- Interest rates below 3.5%— 16% Said it would be unhelpful to both parties
Therefore, this higher-rate group appears to be primed to do business in this new brokerage space, and will likely be among the first to exit the sidelines when market rates fall.
But what does that actually look like? Their top priority may be flexibility.
- Homeowners with higher mortgage rates more likely to be favored than other groups agreed commission – and 40% and 34% People with interest rates below 3.5% are saying the same thing.
- Homeowners with higher interest rates are also less likely to favor fixed fee model — 25% and 32% below the 3.5% level.
- They were about twice as likely to be open to the low-rate group. hourly rate of return For the agent’s time though this response choice still makes up for the shortcomings 6% Higher level respondents.
About Inman-Dig Insights Consumer Surveys
The Inman-Dig Insights consumer survey was conducted April 3-5 to understand Americans’ opinions and behaviors regarding home buying.
The survey sampled 3,000 U.S. adults, ranging in age from 24 to 65, who worked full or part-time. Participants were selected based on a range of criteria, including age, gender and regional distribution.
Statistical rigor was maintained throughout the study, and the results should be largely representative of the attitudes held by U.S. adults working full- or part-time jobs. Inman and Dig Insights are both majority-owned by Toronto-based Beringer Capital.
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