By JOHN BURNS
CNBC did a 95-second clip on rising mortgage rates, including an interesting survey from Redfin about what would happen if mortgage rates rose to 5%. Redfin’s survey of 4000 home buyers concluded that:
- 6% of buyers would not purchase at all.
- 20% would purchase a lower-priced home.
- 20% of buyers would purchase with more urgency, in fear of rates continuing to rise.
- 25% of buyers would slow their plans to buy a home.
Our survey of 300+ home builders showed similar findings:
- 29% would likely see little to no impact on sales, especially to affluent buyers who currently own their home.
- 56% would likely experience a 1%–10% decline in sales volumes, which is not significant enough to cause them to drop prices.
- 15% would experience a decline in sales of 10% or more, especially to entry-level buyers struggling to qualify.
This thinking falls in line with our 4-5-6 rule, where one of the 4 disruptors (this time the economic disruption of rising mortgage rates) impacts each of the 5 life stages differently, which helps us answer several of the 6 key questions: who will be buying, what will they buy, when will they buy, and where will they buy. Rising mortgage rates do not impact everyone the same.