First-time buyers have ‘no low-rate mortgage to surrender’—and with rates back above 7%, one-quarter are leaning on family for the down payment
Fortune · Sydney Lake ·
For first-time buyers, saving for a down payment can take years, and a record share are now relying on inheritances.
It’s hard to believe just a few years ago potential homebuyers were staring down sub-3% mortgages during the pandemic era. That’s because new homebuyers today face mortgage rates back in the 7% range, making it feel impossible for many to break into the housing market.
Meanwhile, many current homeowners are holding on to the low rates they locked in during the pandemic, but first-time buyers don’t have that option. As Odeta Kushi, deputy chief economist at First American Financial Corporation, recently put it, they have “no low-rate mortgage to surrender,” so they’re facing today’s rates head-on.
“For many younger buyers, mortgage rates below 3% became their reference point, even though those rates were historically exceptional,” Kushi told Fortune. “So today’s rates can feel expensive by comparison, particularly when home prices are also significantly higher.”