Buyers are overestimating mortgage rates, and many have been on the sidelines for over a year
Most American homebuyers waiting for mortgage rates to fall may be working from bad numbers.
A survey released in July by Neighbors Bank found that 45% of potential buyers believe the 30-year fixed mortgage rate is higher than it actually is and just 35% correctly identified where the benchmark stands.
For brokers trying to move those buyers off the fence, the gap signals a market education problem that is stalling deals and compounding buyer costs with every passing month.
The Neighbors Bank survey, conducted via SurveyMonkey in July among 1,000 US adults who identified as potential homebuyers, found that 72% had delayed their home search, sitting out an average of 13 months while waiting for rates to improve.
The rate most are holding out for — roughly 5% on a 30-year fixed — has not been the market average since early 2022.
According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed stood at 6.49% as of July 9, down significantly from a peak of 7.79% in October 2023 but still well above what most respondents said they need to act.
Mortgage rates hovering in the sixes may now represent the new normal for the foreseeable future.
The cost of waiting keeps rising
Patience is beginning to fray. Some 41% of waiting buyers said they already regret not purchasing before rates or home prices climbed further, and 17% said they would have bought at the start of 2025 given a second chance.
The price of hesitation has compounded on multiple fronts. Sixty-seven percent of respondents said home prices in their area had risen since they started searching, while 49% reported that rising rents had made saving for a down payment harder and pushed their timelines back.
The data also reveals a generational divide. Millennials have waited an average of 14 months, compared with 8 months for Gen Z respondents.
Among all respondents, 34% would buy immediately if rates reached their target. The remaining 28% are actively searching and ready to purchase now.
Earlier this summer, rate-sensitive buyers were cycling in and out of the market with little relief on the horizon.
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— Mortgage Professional America Magazine (@MPAMagazineUS) August 28, 2026
What brokers are telling hesitant clients
The survey's findings echo what brokers on the ground have been observing for months.
Amir Nurani, broker-owner at Left Coast Leaders in California, told Mortgage Professional America in April that the current environment represents normalcy, not an aberration.
"I think the current rate environment where we're in the high-5s or low-6s, those are normalized rates for conventional mortgages," Nurani said.
"Those are not high rates. We're going to be in that environment for a while. I would not put a lot of stock into the fact that rates are all of a sudden going to plummet for some magical reason tomorrow."
That view aligns with current forecaster consensus. The Mortgage Bankers Association projects the 30-year fixed will remain in the 6.1%–6.3% range through the end of 2026.
For buyers on the sidelines, MPA's earlier analysis of why brokers and homebuyers must stop waiting for a rate drop laid out the practical alternatives — among them buying discount points at closing to reduce the interest rate for the life of the loan, or accessing down payment assistance to reduce upfront costs.
Both tools allow buyers to work within the current market rather than wait for a rate target the market has not delivered in years.
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