08/28/2026
NAR REALTOR® NewsReal Estate News
What Buyers May Be Getting Wrong About Mortgage Rates
August 27, 2026
Rate expectations, down payment myths and other misconceptions could be delaying buyers’ plans—and some now say they regret they waited.
Mortgage rates haven’t moved much lately, but some would-be home buyers may be waiting on the sidelines based on misconceptions about mortgage rates, financing and what it really takes to buy a home.
A newly released survey of about 1,000 prospective home buyers by Neighbors Bank, a mortgage lender focused on first-time and underserved buyers, found that nearly half—45%—believe mortgage rates are higher than they are. Meanwhile, 72% of prospective buyers say they’ve delayed their home search while waiting for rates to improve, putting their plans on hold for an average of 13 months.
Some may be beginning to question that strategy. Forty-one percent of potential home buyers who are waiting say they regret not buying before mortgage rates or home prices climbed further. Another 17% say they would have bought sooner if they could redo the past year.
The median sales price of existing homes has climbed 2% over the past year, as of July data, and hit a record-high median price in June, according to the National Association of REALTORS®. About half of survey respondents also say rising rents have made it more difficult for them to save for a home.
For buyers who are moving forward, “more homes coming on the market and slower price growth in many areas are giving buyers better options and helping create a more balanced housing market,” says Sam Khater, Freddie Mac’s chief economist.
Buyers May Be Underestimating Their Options
Many would-be buyers say they’ve been holding out for mortgage rates to drop to 5%, a level the market hasn’t seen since 2022, according to the Neighbors Bank survey.
But “buyers who understand where rates actually stand may be positioned to move sooner than they thought,” says Ashley Harris, director of homebuyer education at Neighbors Bank. “The most useful move is usually to work with the market as it is.”
The rate-perception gap is part of a broader issue Neighbors Bank has identified in its recent surveys around what prospective buyers think they need to qualify for a home.
In a separate survey of about 1,000 middle-income renters, 45% believed they needed a credit score of at least 700 to buy a home. More than half—55%—believed they needed a 20% or larger down payment, while another 29% thought they needed between 10% and 19%.
In reality, the median down payment among first-time buyers was 10% last year, according to NAR. Federal Housing Administration loans, a popular choice among first-time home buyers, can require as little as 3.5% down. Yet, 94% of renters surveyed said they didn't know a down payment could be as low as 3% to 3.5%.
“Before writing off this year, home buyers should check where rates actually stand and what loan options are on the table, instead of holding out for a number that may be out of step with the market,” Harris notes. She adds that borrowers may be able to find down payment assistance programs as well as use discount points to get a lower interest rate to help them move forward.
The Neighbors Bank survey found that the renters want real estate agents to connect them to lenders and information about financing programs they may be eligible for. Those conversations also may help to uncover and correct some of the misconceptions potential buyers have, Harris says.
“We need to be asking questions like, ‘What do you know about the homebuying process?’ … ‘Have you heard of the down payment assistance programs in our area?’” she says. “I think it’s time for a new playbook with borrowers that starts with education first.”
Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine and editor of the Styled, Staged & Sold blog.
Content by Melissa Dittmann Tracey
