By Nupur Anand
NEW YORK (Reuters) -U.S. home buyers are becoming more willing to purchase properties even as interest rates stay high, according to a study by Bank of America published on Monday.
About 62% of respondents said they would wait for borrowing costs to fall before buying a house, according to 1,000 people polled in September. That is down from 85% six months earlier.
“We are beginning to see that lack of patience play out in the survey, which ultimately should lead to activity going forward,” Matt Vernon, head of consumer lending at Bank of America, told Reuters.
In a bid to tame inflation, the Federal Reserve has raised its policy rate a total of 5.25 percentage points in the last 20 months. The U.S. economy is showing signs of cooling, raising expectations that the rate hikes are likely done.
Nearly 80% of U.S. mortgages have an interest rate below 5%. That compares with average 30-year fixed mortgage rates that surged to 8% in October, the highest in more than two decades, which deterred buyers.
“There’s a clear desire for homeownership, but for some, it has become more challenging to achieve due to current market realities,” added Vernon.
Homeowners were willing to sell their existing homes and take on higher-interest mortgages if they found a property in a more affordable area or their dream home became available, the survey showed. They also sold their homes for career or family reasons or to seek a lower cost of living.
New-home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month as mortgage rates squeezed out buyers.
Still, Americans’ pent-up demand for homes is expected to increase sales.
“We will be ready and we will be able to utilize our internal resources to meet the improved demand when it happens,” Vernon said.
The second-largest U.S. lender beat Wall Street estimates in its third quarter earnings and its consumer banking revenue increased 6% year-on-year to $10.5 billion.
(Reporting by Nupur Anand in New York; Editing by Lananh Nguyen and Leslie Adler)
