In Today’s Market, Who Has More Incentive to Move: Renters or Buyers?

In 2021, 27.1% of all relocating renters and homebuyers migrated out of the metro they were living in during a period of ultra-low mortgage rates, but in 2022, interest rates more than doubled. As a result, relocating may no longer be the more affordable option for some, but who does it benefit more: renters or buyers?

According to Freddie Mac, renters relocating to a more affordable destination could actually save thousands more per year, while migrating buyers risk taking on higher borrowing costs when refinancing.

Assuming the same median home price and a 15% down payment, borrowers who sell their current home to buy their next, and thus swap out a 3.1% interest rate for a 6% rate, would see their annual savings from migrating flip to a loss despite moving to a more affordable location — from positive $4,700 when mortgage rates were near 3% to a loss of $3,600 as of January this year. The disincentive would be an even more dramatic, a loss of $6,600 a year, at a 7% mortgage rate.

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