The Magic Number: What Mortgage Rates Would Get Buyers and Sellers Excited To Move?

Lately, the universe has hit the pause button on the housing market.

The double whammy of persistently high mortgage rates and pricey homes has paralyzed the housing market, pushing buyers to the sidelines.

Would-be sellers aren’t racing to plant a “for sale” sign in their yard, either. The reason sellers are staying put is simple: If they list their homes, they will also face getting a new mortgage at a higher rate.

So, the market remains stuck as both sides of the market eye the mortgage rates, hoping for a friendlier number.

This problem has many wondering what magical mortgage rate would get both parties moving in and out of homes again. We asked mortgage lenders to look into their crystal ball (and loads of data) for the answers.

Two years ago, mortgage rates were in the low 3% range. Rates doubled by November 2022; since August of this year, they’ve topped 7%.

That number is too steep for many. But if mortgage rates hit a lower number, would it be enough to motivate buyers and sellers to finally get the real estate market moving again? Or will the persistently high home prices keep the market stuck in neutral?

“If the [Federal Reserve] keeps rates stable and the market stabilizes, then I believe you will see more people get off the fence and move forward,” says Mason Whitehead, a branch manager at Churchill Mortgage in Dallas. 

According to Whitehead, mortgage rates are not an absolute deterrent to sellers if the desire to move is strong. But in today’s market, the borrowing rates are a significant hurdle for even the most determined would-be sellers.

For instance, homeowners who refinanced to a low rate a couple of years ago are staying put.

Others might be worried they can’t afford to sell—and then buy a new home. That’s because today’s higher-priced homes and elevated interest rates could offset any financial gains they would make selling their house. Even if they’re sitting on a sizeable chunk of home equity, the profits might not make up for the new, higher mortgage payments.