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‘Financial Instability’ Biggest Factor Stopping Potential Homebuyers

Many potential homebuyers are not in the market to buy because of feelings financial instability, according to a survey released by banking data firm RateWatch Thursday.

In fact, Debra Borchardt, Market Analyst for TheStreet, which owns RateWatch, said the survey revealed a full quarter of potential homebuyers "just don't feel financially stable enough to commit to a house."

The survey, Home Lending: Today's Customer, shows that 38 percent of non-homeowners making between $100,000 and $149,000 surveyed listed financial instability as a contributing factor for not buying a home. This was consistent across all income brackets studied, with the lowest percentage—still a sizable 24 percent—being attributed to those making an annual household income of over $150,000.

Borchardt highlighted the significance of the data, saying, "It's understandable that someone making less than $25,000 a year doesn’t feel like they can afford a home, but it's shocking that someone who makes over $150,000 a year feels equally as poor. Higher home prices could be a good reason why with homes hitting record high prices and inventories hitting a low."

RateWatch's data also revealed that 81 percent of current homeowners have no plans at this time to purchase a different home.

In addition, consumers' most important factor when choosing a lender is the interest rate, with most naming between 4 and 5 percent as the maximum they would pay on a 30-year fixed-rate mortgage.

About Author: James Ames

James Ames is a third-year Law Student at SMU Dedman Law. He has a Bachelor of Arts degree with a major in political science and minor in psychology from Southern Methodist University and has previously worked in the banking industry focusing on various areas, including loan origination, home equity, investment banking, and business banking. His focus in law school is on civil litigation, especially business litigation, as well as law as it relates to business and real estate transactions.
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