90% of Mortgage Rates are sub 6% APR
Mortgage rates in the U.S. are approaching 7%, but only a small fraction of homeowners have loans at that rate. Data from the Federal Housing Finance Agency, analyzed by Torsten Slok, Chief Economist of Apollo Global Management, reveals that just 9% of existing mortgages in the country have rates above 6%. Conversely, approximately 23% of mortgages have rates below 3%, while 38% of homeowners have rates between 3% and 4%. Thus, the majority of U.S. homeowners enjoy the benefits of low mortgage rates.
During the pandemic, millions of homeowners took advantage of historically low rates to refinance their mortgages, resulting in reduced monthly payments. According to a study by the New York Fed, 14 million mortgages were refinanced during this period, with an average monthly payment reduction of $220. However, the current landscape for prospective homebuyers is more challenging due to surging mortgage rates. As of July 13, the average 30-year mortgage rate stood at 6.96%, according to Freddie Mac. Consequently, new homebuyers are increasingly joining the small group of homeowners with rates above 6%.
As of July 13, 2023 the average 30-year mortgage rate stood at 6.96%
The prevalence of low mortgage rates among existing homeowners has created a significant problem in the housing market: a shortage of supply. Homeowners are hesitant to sell their homes because if they need to take out a new mortgage, they would face rates of 7% or even higher, depending on lender quotes. This lack of incentive to move and acquire a new mortgage contributes to the persistently low supply in the housing market, as noted by Torsten Slok. In early July, new listings were down 27% compared to the previous year, further exacerbating the supply shortage.
Realtor.com reported that 82% of prospective buyers and sellers feel “locked in” by their low mortgage rates, deterring them from taking action. More than half of sellers are waiting for rates to decrease before making a move. Younger homeowners, particularly millennials aged 27 to 42, are even more inclined to delay selling their homes due to the higher amount of mortgage debt they still owe. In fact, nearly 80% of millennial homeowners plan to postpone selling in the next three years, according to a survey by Harris Poll and Credit Karma. Some younger homeowners are resorting to renting out their current homes or living with a former partner to avoid selling.
In contrast, baby boomers aged 59 to 72 feel less constrained by rates. Many in this demographic have already paid off a significant portion of their mortgages and may not require financing for a new home. As a result, they are less affected by the high rates. The limited availability of previously-owned houses for sale has led some eager buyers to consider new homes instead, resulting in a 12.2% increase in new home sales as of May 2023, according to government data.
The housing market’s supply shortage, caused by the disparity between current rates and the lower rates held by the majority of homeowners, continues to pose challenges for prospective buyers and sellers alike.
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Frequently Asked Questions
Predictive Borrowers
Too often, media companies and agencies double dip. We believe in audience exclusivity. So, when you’re marketing to a specific area, we do not have any other lenders marketing to that same area.
Cost is dependent on the audience size, campaign duration, and any add-ons. On average, our Lending Agents spend about $2,500 per month with us.
A lot of lenders depend on their brokerage’s mini-site or landing page for their web presence. We can send traffic to that page, or we can create you a custom branded landing page too.
Results vary based on where traffic is going, market conditions, and how well the leads created and nurtured. Typically we see about a $100 cost per lead.
Ads are shown across multiple display networks. Ads will show to people on websites, phone apps, social media platforms, blogs, and more.
When we identify a person showing a propensity to move, we serve ads to all devices in their home. This would include their tablets, phones, and computers. But also, we include all of the devices that are in the home and identified as an adult (over age 18) user.
Ads are shown 7-10x per month per device in a home. An average a home has 4.2 devices so your ads would be shown ~30-40 times each month to decision makers and influencers in the household.
