Dive Brief:
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More than a third of American homeowners don’t know what the interest rate is on their mortgages, according to a new survey by Bankrate.
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And whatever that rate is, they believe owning a home is a better investment than renting, the survey said. One in three participants said owning would be better than renting even if interest rates on a 30-year, fixed mortgage reached 10% or higher.
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Ignorance, in this case, could be bliss, Daniel Roccato, assistant professor of economics at Rutgers University, told Bankrate. "This reinforces or confirms that despite the trauma and the drama that we have seen in the real estate market ... people still want to own a home, even if you are looking at potentially higher rates," Roccato said.
Dive Insight:
The fact that people aren’t paying attention to the cost of their loans might partly explain why so few are taking advantage of mortgage interest rates that have dipped below 4%; if they were, more homes would be selling. In fact, the survey showed that many homeowners with high-interest mortgages haven’t even considered refinancing to cut their interest expenses. Instead, Roccato told Bankrate, “oftentimes people buy the [monthly] payment instead of the rate."