The results of a poll conducted among 1,818 U.S. adults nationwide show that nearly half of prospective homebuyers are having difficulty paying for basic housing expenses and that the affordability of home insurance is a key consideration in their decision to relocate. The survey was conducted by Mphasis Digital Risk.
The trajectory of interest rates and what Americans refer to as their “magic number”—the mortgage rate that would compel them to buy a home—have them feeling more optimistic than they did about insurance and housing prices. More than four out of ten respondents (42%) named a 5% rate as the “sweet spot”; more than one in four respondents (27%) suggested 4%, and one in five respondents (20%) suggested 6%.
Further, the majority of Americans feel upbeat regarding the overall trajectory of the mortgage industry. The majority of respondents (64%) state that they are either “very encouraged” (21%) or “somewhat encouraged” (43%) about the impending decline in mortgage rates.
However, a sizable portion of respondents—40%—said they would wait to purchase a property until after the results of November’s presidential election were known. Thirty percent of respondents said that “inflation” was the reason behind high mortgage rates; twenty-three percent blamed the president of the United States; and thirteen percent blamed the Federal Reserve.
More Than Four in 10 Say 5% Mortgage Rates Would Compel Them to Buy
A noteworthy proportion of respondents (39%) reported a “significant increase” in their monthly payments (which include insurance and taxes) in relation to home-related expenses, such as maintenance, utilities, taxes, and fees. These respondents make up 48% of the shockingly large number of persons who face these challenges. Moreover, a majority of Americans (27%) from all income brackets, including the mass affluent and above, reported that they have been compelled to set up a payment plan or other arrangement in order to help with making monthly payments.
Another significant issue on prospective homeowners’ minds is their worries about the rapidly rising costs of property insurance, which are being caused by an increased frequency of extreme weather events: A complete 47% of respondents said that the cost of home insurance will play a “good deal” (29%) or “a lot” (18%) role in their decision to move. Because of the severe weather in their location, some 25% of respondents said they are thinking about moving, and 26% said they know of someone who had to relocate owing to high house insurance premiums.
“Many prospective buyers started questioning the American dream of homeownership as inflation brought mortgage rates to a cyclical peak of 8% in October 2023, but now rates are down more than 1.5% from this peak,” said Jeff Taylor, Co-Founder and Managing Director of Mphasis Digital Risk. “We’re now getting closer to homebuyers’ comfort zone of low-6%, high-5% rates, and September’s anticipated Fed cuts should help buyer sentiment. This is why industry estimates call for a robust 2025 with $2 trillion in expected mortgage originations.”
The majority of respondents—just under 30%—are thinking about buying a house in the second part of the year. However, as the supply of available homes drives prices higher, buyers are experiencing the affects of a seller’s market. More than 20% of buyers say they’ve been looking for a home for more than two years and find the situation to be “a bit depressing,” and 17% say it’s something that they think about frequently and that makes them feel angry and unhappy.
To read the full report, including more data, charts, and methodology, click here.
