32% of Americans said they would need mortgage rates to fall below 6% to feel comfortable buying a home this year, according to a recent Bankrate survey. This reflects widespread hesitation among potential buyers amid currently high borrowing costs.
Mortgage rates have hovered around 6.7% for a typical 30-year fixed loan, a level far above the historic lows seen during the pandemic. Many Americans still recall the 3% mortgage rate era with fondness, which contributes to the reluctance to buy at present rates.
Bankrate’s survey found that over half of homeowners say they would only feel comfortable buying if mortgage rates dropped below 6%. About 38% want rates to be under 4% to even consider a purchase, which indicates how far the market is from typical buyer expectations.
This has kept the housing market sluggish, with sales of previously owned homes near their lowest levels in decades, according to the National Association of Realtors. Elevated mortgage rates increase monthly costs, deterring many prospective buyers despite somewhat slower home price growth.
Jeff Ostrowski, a housing market analyst with Bankrate, said that the spring 2025 homebuying season was historically slow because Americans are not ready to release memories of extremely low mortgage rates. He cautioned buyers to keep realistic expectations given economic health.
The Federal Reserve’s interest rate policies since last year aimed to tame inflation but led to mortgage rates rising above 7% briefly early this year. Rates recently eased slightly but remain high, adding to buyer unease.
While a small percentage of homeowners say they would comfortably sell or refinance at 6% or higher, most prefer much lower rates to consider selling or buying. This “lock-in” effect keeps homeowners in place and limits market inventory.
Recent data from Freddie Mac shows the average 30-year fixed mortgage rate fell slightly to around 6.58%, marking a 10-month low. Despite this decline, the rate remains above what many buyers require for confidence in purchasing.
The link between mortgage rates, the 10-year Treasury yield, and Federal Reserve decisions means rates could stay stable or even rise again. This uncertainty keeps many would-be homebuyers waiting for a more favorable financial environment.
Some buyers still find ways to make purchases affordable, such as negotiating rate buydowns on new builds. However, for most Americans, mortgage rates below 6% remain a key threshold for considering homeownership this year.
In summary, most Americans are cautious about buying homes due to mortgage rates that are well above pandemic lows. Until rates fall closer to or below 6%, many will hold off on entering or moving within the housing market. This trend affects overall market activity and home sales.
