Millennials most likely to unlock low mortgage rate to move: Freddie Mac

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Millennials most likely to unlock low mortgage rate to move: Freddie Mac

Millennials may have to trade in a low mortgage rate if they want to move to a bigger house. 

Most homeowners who are locked into historically low mortgage rates are happy to remain in their current homes, except for millennials, a recent Freddie Mac report said. 

Millennials and Gen Xers have locked in the lowest mortgage rates at roughly 4.0%, the report said.  Thirty-seven percent of millennials locked into their low rates in 2020 and 2021, buying their first home. Gen Xers, on the other hand, were locked into lower rates in that time frame by refinancing their mortgages.

Gen Xers are more likely to have already transitioned from a starter home to accommodate their growing family. That means this group has less of a need to move and compromise their low-rate mortgage. On the other hand, millennials, particularly younger ones, may have to change jobs or find a bigger home to fit their growing families, Freddie Mac said.  

“While homeowners moving to another home does not add to the net supply of homes for sale, churn is essential for keeping people moving along through their life stages,” Freddie Mac said. “As individuals demand for housing keeps evolving as young families move into starter homes and then transition up into larger homes as their families grow.”

Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.


Home prices keep gaining

High mortgage rates have challenged homeowner affordability, but it’s not the only consideration keeping buyers from moving. Freddie Mac said buyers may also hesitate to move because of high home prices.   

“House prices also play a leading role, and risks are weighted to the upside with growing prices, which may keep the housing churn lower for longer, Freddie Mac said. 

Home prices reached a new high in March and are now 6.5% above their level last year, on par with the increase registered in February, according to the latest S&P CoreLogic Case-Shiller national home price index report. San Diego registered the highest year-over-year gain, with an 11.1% increase in March. New York and Cleveland followed in second place, registering an annual growth of 9.2% and 8.8%, respectively.  

One way to use your home’s equity is through a cash-out refinance to help you pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score.


Buyers can’t afford a down payment

Based on the current interest rate of 7.22% over a 30-year mortgage, buyers today would need to earn an annual income of roughly $120,000, plus a 10% down payment, to afford a home, according to the Clever Real Estate report. However, the average American household earns about $45,000 less than that, and many first-time buyers can’t afford a 10% down payment.

Household earnings below $120,000 render the $332,494 price tag of median-priced homes in the current market unaffordable, even if buyers save for a 10% down payment. On the other hand, a smaller down payment would require households to earn above that $120,000 salary threshold since their monthly payment would increase.

“The most expensive home the median household could comfortably afford after a 10% down payment is $207,529,” Clever said.  “If mortgage rates dropped to 2.5% tomorrow, that same household would be able to afford a home that cost $300,000 — underscoring the impact of high mortgage rates on affordability. However, that figure is still below the national median home price of $332,494.”

If you’re looking to become a homeowner, Credible could help you find the best mortgage rate for your financial situation and you can prequalify within minutes.


Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column.

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