More than half of recent home buyers are big gamblers. Not at the blackjack table or roulette wheel, but with mortgage rates.
According to a new survey of 1,000 buyers, 56% are wagering their futures, betting that mortgage rates will come down enough for them to refinance. Nearly two-thirds of the youngest buyers told pollsters that refinancing is important to their financial health.
The findings “reveal a generation of homebuyers who are taking significant financial risks in today's market," said Ethan Winchell of Truework. “While homeownership remains a priority, younger buyers are betting their financial future on the hope that interest rates will drop significantly enough to make refinancing viable.”
Truework, a platform that delivers verification reports, partnered with research firm Prodege to conduct a national, online survey of people who took the plunge and bought a home within the past 24 months — despite historic socioeconomic roadblocks, not the least of which were rising loan rates.
The survey found that for one in four respondents, the ability to refinance is “extremely important” to their economic well-being. That finding was far more pronounced among the Millennials and GenXers queried than the Baby Boomers, two to one.
Gen Z buyers, in particular, feel pessimistic about their financial future after buying, significantly higher than the overall average (27% vs. 16%). And 19% of Gen Z buyers said they felt financially insecure when purchasing their home. Some 16% of the Millennials felt that way.
“Today’s homebuyers are increasingly desperate for a return to lower interest rates, with many who have recently purchased a home hanging their hopes on future refinancing to lower their monthly payments,” said Truework’s Victor Kabdebon. “That could be a very risky move if it doesn't happen — and most analysts predict it will not anytime soon.”
Given that current interest rates hover near 7% and inventory is still limited in many areas, researchers looked at what was driving people to buy despite those things. The top two driving factors across all generations, regions, and marital statuses were (1) necessity of the purchase at 32% and (2) the realization that prices, though high, may only get higher at 21%.
The survey also found that homebuying these days seems to be more stressful than ever.
Nine in 10 respondents said they experienced stress during the process, with a third of them citing “significant” stress. The youngest buyers felt the highest stress levels.
