Nearly 9 in 10 U.S. homeowners have a mortgage rate below 6 percent, according to a new report from the real estate company Redfin.
Some 88.5 percent have a mortgage rate below 6 percent, down from a high of 92.8 percent of homeowners in in the second quarter of 2022, the report found.
More than three-quarters of homeowners — 78.7 percent — have a mortgage rate below 5 percent, while nearly 6 in 10 — 59.4 percent — have a mortgage below 4 percent. Just 22.6 percent have a mortgage rate below 3 percent, according to Redfin.
As the average mortgage rate currently sits at 6.66 percent, Redfin noted that many homeowners are opting to stay put in order to avoid higher rates, resulting in a phenomenon known as the “lock-in effect” that is helping fuel the country’s housing shortage.
“A lot of sellers are worried about finding their next house because even though listings are rising, there’s still a housing shortage. That’s part of the reason so many sellers remain on the sidelines,” David Palmer, a Redfin Premier real estate agent in Seattle, said in a statement
However, mortgage rates are lower than they were earlier this year, after climbing to nearly 8 percent in October, leading some homeowners to consider selling, according to the real estate company.
“Sellers have started coming out of the woodwork because that’s typical for January and because mortgage rates have dropped,” Palmer said.
“They’re also coming to terms with the fact that rates aren’t going back down to 3 [percent] any time soon, which makes it easier to pull the trigger on selling,” he added.
Mortgage rates have climbed over the last two years alongside interest rates, which the Federal Reserve has repeatedly hiked in an effort to tame stubbornly high inflation. However, the central bank appears to be nearing an end to its rate hike campaign, after holding rates steady at its last three consecutive meetings.
Financial markets are also increasingly hopeful that the Fed will begin cutting interest rates this year, after most Fed officials indicated in their economic projections in December that they anticipate at least two rates cuts in 2024.
The Redfin report is based on data from the third quarter of 2023 from the Federal Housing Finance Agency’s National Mortgage Database.
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FAQs
Nationally, 88.5% of U.S. homeowners have a rate below 6%, Redfin RDFN said in a new report on Friday. The brokerage analyzed data from the third quarter of 2023 from the Federal Housing Finance Agency's National Mortgage Database.
What percentage of mortgages are below 6%? ›
In fact, nearly 89% of borrowers have an interest rate below 6%, a Redfin study reports. just over 78% of borrowers have a rate below 5% while 59.5% have a rate below 4%. Those lucky enough to have an interest rate below 3% fall to 22.6% of homeowners, Redfin reports.
How many people have mortgage rates below 5%? ›
More than three-quarters of homeowners — 78.7 percent — have a mortgage rate below 5 percent, while nearly 6 in 10 — 59.4 percent — have a mortgage below 4 percent. Just 22.6 percent have a mortgage rate below 3 percent, according to Redfin.
Is 6% mortgage rate high? ›
A “good” mortgage rate is different for everyone. In today's market, a good mortgage interest rate can fall in the high-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circ*mstances.
When were mortgage rates 6 percent? ›
30-year fixed-rate mortgage trends over time
| Year | Average 30-Year Rate |
|---|
| 2008 | 6.03% |
| 2009 | 5.04% |
| 2010 | 4.69% |
| 2011 | 4.45% |
12 more rowsApr 12, 2024
The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac.
How many people have a mortgage rate below 3%? ›
Below 4%: 59.4% have a rate below 4%, down from a record 65.3% in the first quarter of 2022. Below 3%: 22.6% have a rate below 3%, down from a record 24.6% in the first quarter of 2022.
Are more than 90% of homeowners locked into sub 6 mortgages? ›
Almost 90% of U.S. homeowners have a mortgage rate below 6%, according to a report Friday from Redfin. To be precise, 88.5% of homeowners have a rate below that threshold, down from a high of 92.8% in the second quarter of 2022, the online property portal said.
Will mortgage rates go below 6? ›
The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025.
What was the lowest average 30 year mortgage rate? ›
30 Year Mortgage Rate in the United States averaged 7.73 percent from 1971 until 2024, reaching an all time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021. This page includes a chart with historical data for the United States 30 Year Mortgage Rate.
Lawrence Yun, chief economist at the National Association of Realtors, even told CNBC that he doesn't think mortgage rates will reach the 3% range again in his lifetime.
Is 7% a high mortgage interest rate? ›
LOS ANGELES (AP) — Prospective homebuyers are facing higher costs to finance a home with the average long-term U.S. mortgage rate moving above 7% this week to its highest level in nearly five months. The average rate on a 30-year mortgage rose to 7.1% from 6.88% last week, mortgage buyer Freddie Mac said Thursday.
Will rates go down in 2024? ›
The general consensus among industry professionals is that mortgage rates will slowly decline in the last quarter of 2024. The projected declines have shrunk, though, in recent months. At the start of the year, for instance, Fannie Mae predicted rates would drop to 5.8%.
How much interest is paid on a 30 year mortgage? ›
Average 30-Year Fixed Mortgage Rate
Rates are at or near record levels in 2021 with the average 30-year interest rate going for 3.12%.
What is a good mortgage rate? ›
As of May 9, 2024, the average 30-year fixed mortgage rate is 7.10%, 20-year fixed mortgage rate is 6.80%, 15-year fixed mortgage rate is 6.22%, and 10-year fixed mortgage rate is 6.20%. Average rates for other loan types include 6.92% for an FHA 30-year fixed mortgage and 7.13% for a jumbo 30-year fixed mortgage.
What will the mortgage rate be in 2024? ›
In Fannie Mae's April rate forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 6.4%. The Mortgage Bankers Association also predicts the rate will drop to 6.4% by the end of the year. Both forecasts also expect rates to end up around 6% by the end of 2025.
What is the 33 percent rule for mortgages? ›
In other words, if your monthly gross income is $10,000 or $120,000 annually, your mortgage payment should be $2,800 or less. Lenders usually require housing expenses plus long-term debt to less than or equal to 33% or 36% of monthly gross income.
Is 5% a high mortgage rate? ›
Homebuyers waiting for lower mortgage rates
If rates drop even lower — below 5% — nearly one-third of potential buyers say they could afford to buy. Since 2022, when the Federal Reserve began its campaign of interest rate hikes to tame inflation, mortgage rates have been climbing upward with little respite.
What is the 43 percent rule for mortgages? ›
A DTI of 43% is typically the highest ratio a borrower can have and still get qualified for a mortgage, but lenders generally seek ratios of no more than 36%. A low DTI ratio indicates sufficient income relative to debt servicing, and it makes a borrower more attractive.
Is 5% good for a mortgage? ›
But there is a tipping point, recent reports found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to Zillow, and 71% of prospective homebuyers who plan to purchase their next home with a mortgage said they would not accept a rate above 5.5% — that is the " ...
