The article discusses the 'lock-in effect' in the housing market, where homeowners with favorable mortgage rates are reluctant to sell, leading to significant declines in sales. A survey reveals that only 16% of homeowners would accept a mortgage rate up to 7% while 54% would consider rates up to 5.5%. The hesitation can be attributed to personal changes and evolving acceptance of current market conditions, as more homeowners realize the likelihood of returning to lower rates is slim. Meanwhile, the effects of rising rates are causing shifts in homeowner sentiments.
Only 16% of homeowners said they'd accept a mortgage rate up to 7% on their next purchase. Just over half of homeowners (54%) said they'd accept a mortgage rate up to 5.5% on their next purchase.
Our biggest regret with this survey question is that we didn't start conducting it quarterly or semiannually back in 2022. Our hypothesis is that, over time, as mortgage rates have remained higher for longer than consumers expected, the mortgage rate that potential homeowners-who are selling to buy-are willing to accept has been rising.
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