The Average Homeowner In America Needs A Mortgage Rate Below This Number

In mid-2024, Bankrate's Mortgage Sentiment Survey showed that most homeowners aren't ready to shop for a new place at today's rates. More than half (52%) say they'd only consider buying if rates fall below 6%. Meanwhile, 38% are completely on the sidelines — no current rate will tempt them to move this year. And 20% are holding out for what feels impossible; rates under 3%. As of September 2024, 30-year mortgages were hovering around 6.2% to 7%, per Bankrate, well above most people's "comfort zone." That gap between wish and reality helps explain why for-sale inventory is still tight and so many potential buyers feel stuck.

People are hesitant because today's mortgage bills feel like a shock. Someone with a $400,000 loan at 3% pays about $1,686 a month. At 7%, that same loan jumps to roughly $2,661. Even a 1% difference in mortgage rate significantly change the picture. In March 2025, Bankrate's survey showed that 47% of homeowners won't start house hunting until rates dip below 5%. On the selling side, 35% say they need rates under 6% to put their home on the market, and another 42% say no current rate would motivate them to list. That stalemate is likely to persist until the U.S government eases policy or household incomes rise enough to absorb the higher monthly payments.

While many homeowners secured mortgage rates between 3% and 4% during the pandemic, via Freddie Mac, the exact percentage has declined over time. As of Q1 2025, about 82.8% of U.S. homeowners with mortgages have rates below 6%, down from a peak of 92.7% in Q2 2022, according to Business Wire. When they sell and buy again, it could double their interest rate.

In 2020, Jennifer Lovelace bought a $215,000 home in Florida, with a 30-year loan at 3.25% interest, according to The Sun. Her monthly payment, including taxes and fees, was about $1,300. As of 2024, her family has grown, so she needs more space. However, today's higher home prices and mortgage rates near 7% would push her payment above $2,500 for even the same spot. Faced with that steep increase, she's stuck in her starter home, waiting for either prices or rates to drop before she can move.

That "lock-in effect" keeps people from listing their homes. A family paying $1,800 a month on a 3% mortgage would see that jump to about $2,700 if their rate rose to 6.5%. That means they'd need around $12,000 more in annual income just to break even. Bankrate warns that even if the U.S. government cuts its policy rate, mortgage rates could stay above 6% because they also hinge on investor demand and inflation.

Mortgage rates are unlikely to dip below 6% soon, however Bankrate's 2025 mortgage-forecast predicts that a 30-year fixed rate will fluctuate near 6.5% through year-end, and a sustained sub-6% level may not arrive until 2026 or later. This outlook stems from persistent inflation and the Federal government's gradual approach to cutting benchmark rates, which directly influence mortgage pricing.

For buyers, waiting indefinitely isn't practical. Instead, you should improve your credit score to qualify for the best mortgage rates. Even if it is by 20 points. Reduce your debt-to-income ratios by paying down credit cards or auto loans. One more approach is to monitor rate trends weekly and be ready to lock during brief dips into the high-5% range, as temporary windows may offer the best near-term opportunity.

You should also aim to get a mortgage based on your monthly income. When you apply for a mortgage, lenders look at your gross monthly income and add up all your debts — including the new mortgage payment — to calculate your debt-to-income (DTI) ratio. A lower DTI shows you have enough income to handle your bills and usually earn you a better interest rate. Most lenders won't approve a DTI higher than 43%, so the size of the loan you qualify for depends directly on your income. Hence, keep your mortgage amount in line with what you earn to show you can afford the payments and boost your chances of getting approved.