As the mortgage rate slowly rises in the beginning of this year, only 6 percent of homebuyers said they would cancel their plans to buy if mortgage rates surpassed 5 percent, according to a late 2017 survey by Redfin.
By the end of 2017, the average 30-year fixed mortgage rate was right under 4 percent, then in January it inched over 4 percent and continues to steadily escalate. Despite the ever-increasing cost, homebuyers seem unfazed by the idea of a rise in mortgage rates.
The survey found that 25 percent said that a mortgage rate rise of 5 percent would have no impact on their decisions whatsoever. Additionally, 27 percent of respondents who plan to buy a home in 2018 said that a 5 percent mortgage rate would only slow their plans to buy a home, 21 percent said they would look in other areas or buy a smaller home, and another 21 percent said they would increase their urgency to buy before rates went up.
When this survey launched in early November of last year, a Senate tax reform bill proposed a complete repeal of state and local tax deductions. This lead to some uncertainty concerning a possible change of legislation, particularly to those who were in the process of buying or selling a home. When survey respondents were asked about their concerns of the current U.S. economic climate, about 38 percent had high taxes within their top three choices with the other two most reoccurring choices being affordable housing (33 percent) and the income gap between the rich and poor (28 percent).
In addition, 77 percent of survey respondents said they fully expect home prices to rise in 2018, with 52 percent expecting a slight increase and 25 percent expecting a significant increase.
“Tight credit, lack of inventory and high demand are the major factors that tell us there’s no housing bubble, despite rapid price increases,” said Redfin chief economist Nela Richardson. “There are still many more buyers than the current housing supply can support, with no major relief in sight.”