84% of Homebuyers "Buy Now, Refi Later" Attitude

In the current housing market, prospective homeowners have faced numerous challenges, such as limited inventory and soaring prices. To compound the issue, the 30-year mortgage rate has remained above 6% for the past year.

Despite this, buyers have been advised not to fret, as they can always "buy now and refinance later" when rates drop. According to a recent survey conducted by U.S. News, many individuals are following this advice.

Between September 1 and 7, U.S. News surveyed 1,200 Americans who had purchased a home within the past year using a mortgage. The respondents were asked various questions about their new home loans, including their plans for refinancing, the desired decrease in rates for refinancing, and their feelings about obtaining a mortgage when rates were high.

Here are the key findings:

• A significant majority (82%) of recent homebuyers were reassured that they could "buy now and refinance later." Their mortgage loan officers (63%) and real estate agents (60%) were the primary sources of this advice. However, 13% expressed concerns about being able to continue making payments if they couldn't refinance. Among borrowers with adjustable-rate mortgages, this figure rose to 16%.
  
• The vast majority (84%) of respondents plan to refinance in the future to secure a lower rate. When asked how much rates would need to decrease for them to consider refinancing, 43% indicated a range between 5.5% and 6%. Approximately one-fifth (19%) intend to wait for rates to drop below 5%, which is not expected until 2025. However, nearly half (47%) believe they will be able to refinance within a year.
• More than half of recent buyers (55%) expressed regret about obtaining a mortgage when rates were high. First-time homebuyers were more likely to experience regret compared to repeat buyers, with percentages of 62% and 39%, respectively. Moreover, 50% of all respondents feel trapped by their current mortgage rate and monthly payments. This sentiment is shared by 56% of first-time buyers and 36% of repeat buyers.
• The majority of homebuyers (78%) are at least somewhat stressed about the expected continuation of high rates throughout 2023. First-time buyers exhibit higher levels of stress compared to repeat buyers, with percentages of 81% and 72%, respectively. Among first-time buyers, 25% feel very or extremely stressed, while the corresponding figure for repeat buyers is 18%.
• Nearly all respondents (93%) took steps to secure a lower mortgage rate when purchasing their homes. Approximately two-thirds (64%) engaged in comparison shopping with multiple lenders. Additionally, around one-third either opted for an adjustable-rate mortgage (35%) or chose a shorter mortgage term (35%). Furthermore, 19% purchased mortgage discount points.

The survey highlights the challenges faced by recent homebuyers in navigating the housing market and the strategies they employ to mitigate the impact of high mortgage rates.

Please contact Our Team to review your best options or answer any questions.