By Kerry Smith
Gen Z (81%) and millennials (71%) felt the most stress, in part because many are first-time buyers. The main stress-triggers: Low inventory and rising loan rates.
CHERRY HILL, N.J. – While 54% of homebuyers say it’s a good time to purchase a home, it’s still a nerve-wracking process. According to TD’s 2023 Mortgage Service Index, 64% of respondents felt their most recent homebuying experience was stressful. Big Village Insights conducted the study.
Home inventory challenges (24%) and mortgage rates (24%) tied as the leading factors that negatively impacted home purchasing decisions. Still, 68% of buyers cited shifting interest rates over the last year as a factor in their decision to enter the market.
Given the tight inventory of existing homes for sale, though, three out of 10 buyers (29%) opted for new construction.
“The Federal Reserve has increased rates every time it has met for over a year, so the pause on rate hikes last month and the fact that we’ve likely reached a near peak may offer some respite for buyers,” says Steve Kaminski, head of U.S. Residential Lending for TD Bank. “But given the competitive market and already high home prices, it’s understandable that the headache persists for many looking to purchase a home.”
Kaminski says lower inflation and an improving economy may be “key to alleviating that stress.”
Stress by generation
- Gen Z (81%) and millennial respondents (71%) were most likely to find the process stressful.
- Baby boomers found the purchasing process to be a less taxing experience, with 47% of saying they didn’t find it stressful.
- A strong majority of millennials (84%) and Gen Z (90%) respondents said interest rates were a factor in their decision to buy – but a majority of boomers (58%) said fluctuating interest rates were not a factor in their decision, perhaps in part because a higher percentage does not need a mortgage.
Other study findings
- 65% of respondents said they were familiar with programs designed to help homebuyers seek flexible down payment options
- 40% spent $2,000 – $5,000 in unexpected charges during the homebuying process; another 10% say they paid over $5,000.
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