Majority of homeowners report stressful recent homebuying experience—here's a closer look

While more than half (54%) of homebuyers say now is a good time to purchase a home, it's still very much a nerve-wracking process. TD Bank surveyed more than 1,800 homeowners across the country to examine perceptions around the homebuying and mortgage experience, as well as the housing market, and found that 64% of respondents indicated their most recent homebuying experience was stressful.

As expected, inventory and interest rates were the biggest factors for many

Home inventory challenges (24%) and mortgage rates (24%) tied as the leading factors negatively impacting home purchasing decisions. Additionally, a majority (68%) of homebuyers cited shifting interest rates over the last year as a factor in their decision to buy. As inventories in many markets remain inconsistent, almost a third (29%) purchased newly constructed homes.

The Federal Reserve increased interest rates 11 times over a 17-month period from February 2022 to July 2023, in an effort to curb inflation. The brief pause on rate hikes experienced in early July 2023 suggested a peak in rates that many hoped would offer some respite for buyers. Unfortunately, the increase announced on July 26, which brought interest rates to their highest level since 2001, coupled with the already competitive market and high home prices, continued to make homebuying a frustrating and treacherous endeavor. 

With 30-year mortgage rates currently flirting with 8% and inflation sitting just below 4%, an uncomfortable dichotomy for potential homebuyers persists. The key to alleviating that stress is speaking to a knowledgeable, trusted lender before beginning a search to ensure buyers are looking within their budget and tapping into all the resources that can save them money.

Despite these inventory and rate challenges, three-fourths (75%) of those surveyed said that the mortgage process did not prevent them from closing on their home within their desired time frame.

With age comes wisdom: experience matters when navigating homebuying

When it comes to navigating the overall homebuying process, sentiment varies between generations:

• Gen Z respondents (81%) and Millennial respondents (71%) were most likely to find the process stressful.

• Baby Boomers, on the other hand, found the process of purchasing a home to be a less taxing experience, with 47% of these respondents indicating they didn't find homebuying to be stressful.

• While an overwhelming majority of Millennials (84%) and Gen Z (90%) respondents reported interest rates were a factor in their decision to buy, the majority of Baby Boomers (58%) said fluctuating interest rates were not a factor in their decision.

While the mortgage process remains intimidating for some, many homebuyers are also comfortable seeking guidance and tapping into automation, to perhaps simplify the experience:

• A majority of homebuyers (95%) shared they have sought information or opinions on products and services offered by different lenders, with over half of respondents (54%) indicating they talked to a realtor in seeking additional information.

• As automation in the mortgage lending process also continues to become more prevalent, 68% of homebuyers say they are very or somewhat familiar with automation being used by some banks to streamline the lending process.

• Eighty-five percent of those with any familiarity would like to see at least some automation in the process.

Flexible lending remains a strong option for buyers

As the traditional down payment of 20% or more becomes less of a priority for homebuyers, many are continuing to educate themselves on low down payment and affordability-based options, with 65% of respondents indicating they were familiar with programs designed to help homebuyers seek flexible options.

Interestingly, 40% of respondents spent $2,000 – $5,000 in unexpected charges during the homebuying process and another 10% say they paid over $5,000. This reinforces the importance of leaning on experts like realtors and loan officers who can provide valuable insight on the total cost of homeownership and affordability programs that allow for down payments as low as 3%, saving buyers money on out-of-pocket expenses.

Survey methodology

This report presents the findings of a CARAVAN survey conducted by Big Village Insights among a sample of 1,813 U.S. homeowners who last purchased a home within the past 10 years and acquired a mortgage when they bought their most recent home. The survey was live from May 16-26, 2023.

This story was produced by TD Bank and reviewed and distributed by Stacker Media.