The short answer…right now, today, the third week in July… is no, according to Redfin’s recent report called Homebuyers Face Rising Mortgage Rates Head-On.
Redfin found that only 5% of its survey respondents would call off their home search if interest rates rise above 5%. 24% of its survey respondents said that +5% interest rates would have no impact at all on their home buying plans.
Those survey respondents included 4,000 people who had bought/sold a home in the last year, attempted to buy/sell a home in the last year or planned to buy/sell in the near future.
Similar Redfin surveys asking similar questions produced similar results in May and November 2017.
Taylor Marr, a general economist with Redfin, said, Homebuyers are well aware that higher mortgage rates equal higher monthly payments but…most of the pressure buyers are feeling is from competition for very limited number of homes for sale…That such a small share of buyers would scrap their plans to buy a home if rates surpass 5%^ reflects their determination to be a part of the housing market.”
Rather than scrapping their plans to buy, homebuyers are willing to adjust their home buying process…
- 32% said they would slow their search and see if interest rates come down again.
- 21% said a 5% rate would encourage them to either look in other areas or buy a smaller home.
- 19th said they would increase their urgency to buy before rates increase even more.
In another recent survey of Millennial homebuyers (ages 24-38), Redfin asked about their top concern in buying a home.
- 50% said they were concerned about having enough money for a down payment
- 45% were concerned about being able to afford a home in their preferred location
- 41% said they were concerned about rising home prices.
In this same survey, Redfin asked Millennial homebuyers how they would pay for their home.
- 36% Millennial buyers would take a second job to pay for their down payment
- 31% said they would rent out a room in their new house to someone they know
- 19% said they would rent out a room in their new house to someone they didn’t know
- 15% said they would drive for a ride-sharing service to supplement their earnings and buying power
- 14% said they would create a plan to split ownership of the house with friends/roommates.