More US home buyers willing to purchase despite high rates: BOA study
US HOME buyers are becoming more willing to purchase properties even as interest rates stay high, indicated a study by Bank of America (BOA) published on Monday (Dec 4).
About 62 per cent of respondents said they would wait for borrowing costs to fall before buying a house, according to 1,000 people polled in September. That is down from 85 per cent six months earlier.
“We are beginning to see that lack of patience play out in the survey, which ultimately should lead to activity going forward,” said Matt Vernon, head of retail lending at BOA.
In a bid to tame inflation, the Federal Reserve has raised its policy rate a total of 5.25 percentage points in the last 20 months. The US economy is showing signs of cooling, raising expectations that the rate hikes are likely done.
Nearly 80 per cent of US mortgages have an interest rate below 5 per cent. That compares with average 30-year fixed mortgage rates that surged to 8 per cent in October, the highest in more than two decades, which deterred buyers.
Homeowners were willing to sell their existing homes and take on higher-interest mortgages if they found a property in a more affordable area or their dream home became available, the survey showed. They also sold their homes for career or family reasons or to seek a lower cost of living.
New-home sales dropped 5.6 per cent to a seasonally adjusted annual rate of 679,000 units last month as mortgage rates squeezed out buyers.
Still, Americans’ pent-up demand for homes is expected to increase sales.
“We will be ready, and we will be able to utilise our internal resources to meet the improved demand when it happens,” Vernon said. REUTERS
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