The Real Estate Blog

A Look at Neighbors Bank’s Nationwide Survey

Sidelined homebuyers say mortgage rates need to drop to 5% before they will jump back into the market. According to a nationwide survey of prospective buyers conducted by Neighbors Bank, this exact target rate is the psychological “magic number” required to unlock a wave of delayed demand. This comes at a time when the average 30-year fixed-rate mortgage has nudged up to 6.66%, driven by persistent inflation and global economic pressures.

The Neighbors Bank Survey highlights how significantly high borrowing costs are stalling the housing sector:

• Delayed Plans: An overwhelming 72% of potential buyers have either completely paused or delayed their home search. On average, these buyers have been waiting 13 months for market relief.
• Immediate Demand: If mortgage rates hit that 5% target tomorrow, 34% of respondents said they would purchase a home immediately.
• The Reality Gap: Interestingly, buyers are out of touch with actual market conditions. Nearly 45% of respondents mistakenly believed current mortgage rates were already well over 6.5% back in July when they were lower.

Why Waiting is a Risky Strategy:

Real estate experts warn that holding out for a magic 5% rate could ultimately backfire. If mortgage rates do drop significantly, it is highly likely to unleash a massive wave of pent-up buyer demand all at once.

This sudden influx of competition can trigger intense bidding wars and drive home values up. Financial analysts from Westgate Capital Ventures point out that saving a few percentage points on an interest rate could easily be wiped out by paying an extra $50,000 to $100,000 upfront for the home itself. Furthermore, buyers can always choose to refinance their loan later if rates eventually fall, but they can never go back and change the purchase price of the house.

As our parents and grandparents told us, “There is no time like the present!”