More US home buyers willing to purchase despite high rates -BofA study (updated)

Applied Energetics

04/12/2023 15:31

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    By Nupur Anand
       NEW YORK, Dec 4 (Reuters) - U.S. home buyers are
becoming more willing to purchase properties even as interest
rates stay high, according to a study by Bank of America  BAC.N 
published on Monday.
    About 62% 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% 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," Matt Vernon, head of consumer lending at Bank of
America, told Reuters.
    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 U.S. economy is showing signs of cooling, raising
expectations that the rate hikes are likely done. 
    Nearly 80% of U.S. mortgages have an interest rate below 5%.
That compares with average 30-year fixed mortgage rates that
surged to 8% in October, the highest in more than two decades,
which deterred buyers.
    “There’s a clear desire for homeownership, but for some, it
has become more challenging to achieve due to current market
realities,” added Vernon.
    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% 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 utilize our
internal resources to meet the improved demand when it happens,"
Vernon said.
    The second-largest U.S. lender beat Wall Street estimates in
its third quarter earnings and its consumer banking revenue
increased 6% year-on-year to $10.5 billion.

 (Reporting by Nupur Anand in New York; Editing by Lananh Nguyen
and Leslie Adler)
 ((Nupur.Anand@thomsonreuters.com; +1 646 240 2975;))