BofA: 70% of Prospective Homebuyers Feel Renting Could Harm Their Financial Future

(Illustration courtesy of Bank of America)

Many prospective homebuyers fear the long-term consequences of renting, including 70% who feel they’re not making a long-term investment in their future, and 72% who worry that rent increases could affect their finances, according to a new Bank of America report.

However, with higher interest rates and home prices, renters report greater uncertainty over whether to keep renting or to buy a home in the current market, Bank of America’s Homebuyer Insights Report found. Today, 57% of respondents are unsure whether it’s a good time to buy, compared to 48% at this time last year. This trend is even more prevalent among first-time homebuyers, with 62% saying they are unsure what to do.

“Given the highly competitive homebuying market, renters are unsure whether now is the right time to buy,” said Matt Vernon, Head of Consumer Lending at Bank of America. But he noted the research continues to show that the vast majority of prospective homebuyers overwhelmingly feel that buying a home, either now or in the future, is the best decision for them in the long run.

The Emotional Value of Owning vs. Renting

Most homeowners and prospective homebuyers agree on the financial and emotional benefits of homeownership—benefits that two-thirds of renters feel they’re losing out on, the report said.

89% of homeowners said the idea of owning a home brings emotional fulfillment rather than added stress.

67% of prospective homebuyers would prefer to own a home for the sense of permanence and emotional stability it provides, rather than the flexibility of renting.

58% of prospective homebuyers said that owning a home is the best long-term decision for them to have control over their own living space

Lacking Confidence & Avoiding Mistakes

Exacerbating the difficulties presented by higher interest rates and home prices, many prospective buyers feel that they lack the confidence needed to begin their homebuying journey, and don’t want to make a mistake.

41% are not confident in their understanding of how to finance or secure a mortgage

41% are not confident in their understanding of interest rates

39% are not confident they understand homebuying terminology