By Mike Bodeen · 2 June 2025
Major Bank Survey Alarming for Buyers and Sellers
When I began my real estate career in the summer of 1976, (200th Birthday of our country) the 30-year mortgage rate hovered around 9%. Because my market was a second home community (Donner Lake, Truckee, CA) higher rates were 9.75%. (See Chart Below)
Tall Ships from the 200th Biennial celebration of Our County – July 4th 1976
If a recent buyer survey is to be believed, nearly 7 out of 10 potential home buyers state that high mortgage rates are impacting their home purchase plans. Plus, a third of potential U.S. home buyers are waiting for mortgage rates to drop to around 3% or less.
BMO Harris, a Leading Canadian multi-National Bank with a significant presence in the U.S., has just released an unsettling survey about the future of mortgage rates in our country. This is per The Cromford Report as of a few days ago (May 25th)…”
…There is no likelihood of us seeing 3% or even 4% for a 30-year fixed loan in the medium term. Let’s get real.” Michael Orr; The Cromford Report
So what’s the issue about waiting for 3% rates? Because it’s not reality. The chances of seeing those rates again are next to zero. If you recall, there was only a brief window of time in the entire history of our mortgage history where rates got that low. (See mortgage chart below)
Michael Orr, founder of the Cromford Report puts it this way:
“…rates this low have rarely existed in the last 100 years. Although we did see rates below 3% for a while between July 2020 and August 2021, that was an abnormal period due to massive injection of liquidity by the government to offset the financial effects of the COVID pandemic. Lenders could borrow funds at close to zero interest rate, so they could still make money lending at 3%. This period gave us by far the lowest mortgage rates in history. Prior to this abnormality the lowest rate seen was around 4% at the end of the second world war. The long term average for 30-year mortgages is about 7.75%, higher than the current 7% or so. There is no likelihood of us seeing 3% or even 4% for a 30-year fixed loan in the medium term. Let’s get real.” Michael Orr
This survey is also not good news for sellers. If the future for more buyers is being negatively impacted, that means that sellers will be negatively impacted as well. If rates don’t become more affordable, prices will need to give, aka lower. We’re already seeing that now, and the trend line is streaming downward.
How then shall buyers and sellers proceed?
Right now savvy sellers are offering, or at least open to providing mortgage interest rate buy-down credits – that’s good. Sellers should also strongly consider dropping their price. Besides affordable mortgage rates, affordable pricing is the only other option. That’s it. If a seller gets an offer he can live with, even though it’s awful compared to a year or more ago, he should strongly consider making a deal with the buyer. It may very well be the best you get. Buyers should boldly negotiate price and terms.
Folks, it’s a grim market. The past is in the rear-view mirror. The future is unknown. Looking at the chart, we can see that the mortgage market has gone up and down. In November of 1981, mortgage rates hit over 18%. That was extreme. In December of 2020 (Covid 19 era) rates hit as low as 2.67%. That was extreme. The actual long-term average for the 30-year fixed is 7.75% – higher than current rates.
Fortunately, though mortgage rates may be higher than we want, a home is tangible. It’s a refuge. It’s a good goal.
Mike Bodeen
Market data referenced in this article comes from The Cromford Report.