• About half of homeowners and renters estimated that the average rate was below 6.00%, but the average rate has not been lower than 6.00% since September 2022.
• Why is this important? 
  • Rate-aware homebuyers understand their affordability and monthly costs and can better navigate different lenders and lending options. 
  • Rate aware homeowners can strategically refinance for substantial savings
• Rate-aware homeowners are more optimistic about the housing market but these optimistic sentiments could mean that they strategically wait to move and sell their homes.

A survey from Zillow Group’s Population Science found that 50% of homeowners and 45% of renters estimated that the average mortgage rate [1] was 6.00% or higher. 

Inversely, the remaining half of homeowners and renters estimated that the average rate was below 6.00%. This is strong evidence that these homeowners are unaware of the average mortgage rate since the average rate has not been lower than 6.00% since September 2022. At the time of the survey (mid-September 2023), the 30-year fixed mortgage rate (FRM) was 7.18%, according to Freddie Mac.

Why does this matter? Rate-aware homeowners and renters are more equipped to make informed financial decisions. With awareness of the prevailing rate, potential home buyers better understand their affordability and monthly costs and can better navigate different lenders and lending options.

For current homeowners, rate awareness allows them to recognize when it is beneficial (and when it is not) to refinance. Refinancing allows homeowners to replace their existing mortgage with a new one at a lower interest rate which could result in lower monthly payments and overall savings. On the flipside, rate unawareness could mean homeowners miss out on substantial savings. 

The ZG Population Science survey also found that rate-aware homeowners were more optimistic about the housing market. Rate-aware homeowners were more likely than rate-unaware homeowners to expect rates to decrease in the future. A third (33%) of homeowners who estimated the average mortgage rate to be above 6.00% expected rates to decrease compared to only about one in five (19%) of those who estimated a rate below 6.00%. 

These optimistic sentiments could mean that rate-aware homeowners strategically wait to move and sell their homes. Indeed, there is slight evidence that those who estimated a higher average mortgage rate are more likely to stay in place. A fourth of (25%) homeowners who estimated the average rate to be above 6.00%  plan to move in the next three years compared to a third (33%) of homeowners who estimated the rate to be below 6.00%. 

Still, the largest share (47%) of homeowners overall believe that mortgage rates will increase in the future (vs. 26% who expect rates to decrease and 27% who expect rates to stay the same). This holds true for both rate-aware and rate-unaware homeowners.

Methodology 

These analyses use data from the ZG Population Science Mortgages and Moving Survey. Homeowners and renters 18 years of age and older who did not move within the last 12 months were eligible for participation. The survey was fielded September 2023 and included 3,188 adults: 2,177 homeowners and 1,011 renters.  For the purpose of this study, “homeowners” refers to household decision makers who live in a home they own. “Renters” refers to household decision makers who live in a home they rent.

To achieve national representativeness, quotas for age, education, sex, region, race, and marital status limited oversampling of any given demographic group. In addition to using quotas for respondent sampling, ZG Population Science weighted the sample to the overall U.S. population using the U.S. Census Bureau 2022 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) using these same characteristics.

[1] At the time of the survey (mid-September 2023), the 30-year fixed mortgage rate (FRM) was 7.18%, according to Freddie Mac.