Almost half of recent home buyers with a mortgage secured a rate below 5 percent, a recent Zillow survey shows.
Current mortgage rates are hovering near 7 percent, yet many buyers who purchased a home in the past year thought outside the box to unlock homeownership.
Mortgage rates surged from historic lows of 2.65 percent in 2021 to decade-long highs of 7.79 percent by the fall of 2023. This directly impacted home shoppers’ buying power. The typical mortgage payment rose 115 percent from pre-pandemic times to a recent peak in May 2024.
The unpredictable mortgage-rate landscape presents hurdles for home buyers, restricting their choices and, in some cases, preventing them from entering the housing market altogether. Despite these challenges, determined buyers are finding creative ways to afford their dream of homeownership, Zillow said.
Among recent buyers, 45 percent managed to secure a rate below 5 percent, Zillow’s survey data shows. More than one-third (35 percent) of these recent buyers could get a lower rate because the seller or home builder offered them special financing. About one-quarter either made their offer contingent on a rate buydown (26 percent), refinanced to a lower rate after buying (25 percent), or borrowed from a friend or family member (23 percent).
“This surprising finding really underscores the creativity of both buyers and sellers navigating today’s dynamic real estate market,” Amanda Pendleton, Zillow's home trends expert, said in a release. “Buyers are finding innovative ways to secure a lower mortgage rate, but sellers are also coming up with financing solutions to make their property more attractive to a potential buyer. Prospective home buyers should explore all the ways they can reduce their monthly payment to bring homeownership within reach.”