Tipping Point For Mortgage Rates

Mortgage rates
At what mortgage rate will prospective homebuyers enter the market?

The housing market has certainly changed since 2021 when it was not uncommon for new home listings to receive multiple offers within hours of hitting the market. Oftentimes, these listings would result in bidding wars with many homes selling above their asking prices. Fast forward to today and we are seeing far fewer buyers in the market, primarily due to rapidly rising mortgage rates. To put this into perspective, mortgage rates rising from 3% to 6% essentially prices out approximately 18 million would-be home buyers out of the market. To read more about this, check out our previous article titled “Higher Mortgage Rates Leading to Less Buyers”. A recent survey from John Burns Research and Consulting polled more than 1,300 homeowners and renters with household incomes of $50,000 and above. We discuss the findings below.

5.5% is the magic mortgage rate

Interestingly, 55% of respondents believed that now is a bad time to buy a home while 22% believed that it is a good time to buy a home. Perhaps even more enlightening is the fact that 71% of respondents felt that a mortgage rate of 5.5% was the tipping point that they would not exceed when buying a home. For perspective, the 30-year fixed mortgage rate has not been at this level since August 2022. Therefore, this explains why home sales are not near where they were in recent years. As of the present time of this article, the average mortgage rate is about 6.4%. For reference, the average 30-year fixed-rate has been 7.75% from 1971 to 2023. During this time, it reached a high of over 18% in 1981, and a low of 2.65% in January 2021. As for this survey, 62% of respondents believed that a historical average mortgage rate was 5.5%.


As evidenced by these survey results, many would-be home buyers feel that a mortgage rate of greater than 5.5% is too high to consider buying a home. Unfortunately, this same sentiment is also impacting would-be home sellers as well. Since many homeowners are locked into lower rates due to buying or refinancing several years ago, we are seeing a lot less activity in the housing market. For more on this, check out our article titled “Less Sellers Due To Low Mortgage Rates”. The reality is that mortgages rates are still at historically low levels when looking across the past five decades. As a prospective home buyer, it is important to analyze the risk of waiting for lower mortgage rates vs the risk of home prices rising.

Are you looking to buy or sell property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, don’t forget to download the free Florida Home Search app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.