Interest rates are often a big motivational factor when it comes to home-buying. High interest rates? Buyers may not bite. Low, however, and the market tends to get busy.
So what does it say that many homeowners don’t know what rate they’re currently paying on their mortgage? They may not be motivated to sell their home and buy again, or to refinance. According to a recently released Bankrate report, 27 percent of respondents stated they didn’t know what their interest rate was.
Here’s the breakdown for what other survey takers reported:
- Paying 0% to 3.999% – 31%
- Paying 4% to 4.499% – 18%
- Paying 4.5% to 4.999% – 7%
- Paying 5% to 5.499% – 6%
- Paying 5% to 5.999% – 1%
- Paying 6% or higher – 11%
“It is concerning that more than a quarter of mortgage borrowers don’t know the rate of interest they’re paying on their existing mortgage,” said Mark Hamrick, senior economic analyst for Bankrate.com, in a statement. “Given the decline in mortgage rates we’ve seen over the past year, many qualified homeowners would stand to benefit, or save, by refinancing.”
Where do homeowners stand on moving out? Over half don’t want to, according to the report. The survey found that 56 percent want to remain in their home “forever.” There is a sharp contrast, however, to the next largest group, at 19 percent, who has a much shorter time frame in mind: 1-5 years.
Is there a generational tie-in? A majority of baby boomers (63 percent) said they don’t expect to move out of their current residence. Meanwhile, only 42 percent of millennials hope for the same. Generation X is about 50/50, however, with 52 percent wanting to stay in a forever home.
Location, relationship status and income may also play a role. According to the report, 60 percent of those who live in the South don’t want to move, and of those earning under $40,000 per year, 67 percent want permanence, as well. A high percentage of widowers (70 percent) also plan to stay in their current primary home for the foreseeable future.
What about those wanting to move in the next 10 years? Thirty-two percent are millennials, 19 percent are Gen Xers, 18 percent are baby boomers and 11 percent are from the Silent Generation. For these homeowners, an understanding of their current interest rates, and those being offered in the market, could prove valuable if a move is in the cards. For those who are staying in their homes, being aware of their interest rate could provide opportunities for refinancing if market rates are lower, helping them cut down on costs.
“With the prospective reduction in monthly payments, the savings could be better put to use, including toward retirement or another worthy financial goal,” Hamrick said. “Here’s where what you don’t know can hurt you, costing you money.”
To access the report, visit www.bankrate.com.
Liz Dominguez is RISMedia’s senior editor. Email her your real estate news ideas at ldominguez@rismedia.com.