Redfin, a Seattle-based online real estate brokerage, reports that Utah has the highest percentage of homeowners in the nation with mortgage rates under 4 percent — substantially below the current rates that are near 5 percent. In Utah 65 percent of homeowners have a mortgage rate below 4 percent. Behind Utah come South Dakota, Colorado, North Dakota, Washington and Idaho — all at roughly 60 percent.
Nationwide, about half (51 percent) of homeowners with mortgages have a mortgage rate under 4 percent.
“With rates now at their highest level in over a decade, many of these homeowners may be incentivized to stay put because selling their home and buying another could mean giving up their ultra-low mortgage rate and increasing their monthly housing bill,” the Redfin report authors said. “This may be contributing to a decline in home listings.”
Mortgage rates have surged as the government seeks to combat inflation. The average 30-year fixed mortgage rate hit 5 percent for the first time since 2011 during the week ending April 14, up from a record low of 2.65 percent in January 2021. That has helped push the typical homebuyer’s monthly mortgage payment to a record high of $2,288, up 35 percent from about a year ago.
“Higher mortgage rates may already be putting a damper on home listings, but they’re also curbing the insatiable homebuyer demand for those listings,” said Taylor Marr, Redfin deputy chief economist. “That slowdown in demand may cause homes to stay on the market longer, in effect giving buyers more options to choose from. Overall, that could mean housing inventory actually gets better, not worse.”
There are already early signs that demand is starting to back off. Home sellers are increasingly cutting their list prices to find buyers, and Redfin said it has seen a drop in buyers requesting service from its agents in pricey coastal markets. Mortgage purchase applications fell 6 percent year-over-year during the week ending April 8, and home-touring activity is below last year’s levels.
The report said that just 18 percent of total homeowners in West Virginia had a mortgage rate below 4 percent — the lowest share in the country. It was followed by Mississippi (22 percent), Louisiana (23 percent), New Mexico (24 percent) and Oklahoma (24 percent).