Mortgage

Nearly 3 out of 4 Utah homeowners have mortgage rate below 4%

SALT LAKE CITY — A significant number of homeowners are sitting on mortgage rates much lower than what is available today.

According to real estate company Redfin, more than 85% of homeowners with mortgages nationwide have a rate below 6%. Three-quarters of them have a rate below 5%, while more than half of homeowners have a rate below 4%.

Even in today’s market, 22% of homeowners with mortgages have a rate below 3%, Redfin said, although those numbers have fallen a little from their peak in 2022.

In Utah, it’s even more pronounced, said Dejan Eskic, a housing analyst at the Kem C. Gardner Policy Institute at the University of Utah.

“We have roughly 72% of (homeowners who) have an interest rate that’s 4% or lower,” Eskic told KSL TV.

That’s leading to what some call a “lock-in effect,” where homeowners are reluctant to give up their low rate and buy a new home with a higher one.

Take Katie Marett, for example. She feels lucky to have a relatively low rate of around 3.5-4% on her house in Murray.

But at the same time, she said, “we’re just stuck.”

That’s because it’s hard to stomach the much bigger payment that would come with a higher mortgage rate.

“In a lot of the ones that I’ve looked at, it would at least double from what we’re paying currently,” Marett said.

‘Golden handcuffs’

Eskic, the housing analyst, agreed this phenomenon is on full display in Utah.

“Everybody’s sort of locked in,” he said. “They have their golden handcuffs.”

That can lead to fewer new listings of homes for sale, Eskic said. But he pointed out many of those homeowners also have a lot of equity.

Mortgage rates have dipped recently, sitting at 6.42% as of Tuesday afternoon, according to Mortgage News Daily.

Usually, a dip leads to more activity in the housing market, Eskic said, but that hasn’t been the case this time.

“It’s an election year,” Eskic said, noting some buyers are more uncertain about the economy.

Plus, with the Federal Reserve expected to cut rates starting next month, Eskic said some buyers have held off getting in the market just yet.

“People are getting a sense that lower interest rates are coming,” Eskic said.

As for Marett, she said she would like a bigger house. But when she thinks about a bigger rate that would come with it?

“I do feel locked in,” she said.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.


100% secure your website.