Survey: 1 in 3 Homeowners Who Want To Move Say High Mortgage Rates Are Holding Them Back

Amid a housing inventory shortage, homeowners who want to move face barriers, and are increasingly turning to high-interest debt to renovate their current homes.

Amanda Woolley
August 1, 2023

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Palo Alto, Calif. — Aug. 1, 2023 — Fears of rising mortgage rates have softened slightly in recent months, but high mortgage rates and home prices are still keeping many homeowners from moving, according to a study from Point, the leading home equity investment platform.

The survey found that while half of homeowners (51.9%) want to move eventually, only 14% think they will do so in their desired timeframe. Of those who want to move, 1 in 3 (34.7%) say high mortgage rates are preventing them from moving when they want to – the most commonly cited deterrent, just ahead of high home prices (33.5%).

And as home prices increase, many buyers are stretching their budgets to buy a home in the first place, creating an affordability hurdle. The survey found that 1 in 6 (17.1%) homeowners are considering a move because their current home is either too expensive for them, or because they want the equity from their home. This rate rises to 1 in 4 (25.3%) among homeowners who bought within the last 5 years – a time in which home values rose 31.8%, according to the Federal Reserve.

“It’s a tough environment for homeowners, as high mortgage rates and home prices have many who want to move feeling trapped in an affordability spiral,” said Eddie Lim, co-founder and CEO of Point. “With the summer home shopping season nearing its end, this is creating a no-win scenario: sellers who are uncomfortable re-entering the buyer’s market at higher mortgage rates don’t list their homes, contributing to an inventory shortage that in turn makes the market tougher on buyers.”

However, lower mortgage rates could entice more homeowners to enter the market. A vast majority of homeowners (89.1%) looking to move said they would consider purchasing another home in the next 6 to 12 months if mortgage rates dropped below 6%. The current average rate for a 30-year fixed mortgage is about 6.8%, according to Freddie Mac – down slightly from its peak in November but considerably higher than the 2-3% rates common just two years ago. Still, fears of rising mortgage rates have ebbed slightly since the end of last year: 54.1% of homeowners think mortgage rates will continue to rise in the next 12 months, down from 68.9% at the end of 2022. 

Homeowners looking to start renovations may also be impacted by high interest rates. Around half (51.8%) of homeowners are planning renovations, and of them, 43.7% are using cash-out refinances, HELOCs or higher-interest debt options (credit cards or bank loans) to pay for their projects. That’s up from 38.5% at the end of 2022. These higher-interest debt options can cost homeowners more money in the long run: if a homeowner were to pay for a median-priced home renovation using a credit card with the average annual interest rate, they could accumulate about $308 per month in credit card interest.

“With the housing market as is, some see renovating as a better alternative to finding a new home, but remodeling can get expensive fast,” added Lim. “Using a product that’s based on equity, like Point’s Home Equity Investment, may make it possible for homeowners to access wealth that’s tied up in the value of their home, enabling them to make home improvements without having to go into debt or qualify for a loan.”

What would stop you from moving in your desired timeframe?

point-survey-results

How will you pay for renovations?

renovations-survey-results

For more details on the study, the full report can be found here

For this survey, we asked 1,071 homeowners ages 20-80 about their moving and home renovation plans using Survey Monkey’s online panel. The survey was conducted on June 30th, 2023, with a margin of error of +/- 4%.

Monthly interest calculated based on a $18,000 median average price for a home improvement project and an APR equivalent to the average annual interest rate (20.68% as of May 2023). This calculation assumes that the renovation cost is the card’s entire average daily balance, and that the card has a 30-day billing period and no grace period.

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