Barbara Corcoran Reveals Mortgage Rate Drop That She Believes Will Make Housing Market ‘Go Ballistic’

Real estate guru Barbara Corcoran has revealed the mortgage rate drop that she believes would cause the housing market to “go ballistic,” while warning that there is a “desperate need” for more first-time buyers to get onto the property ladder.

Corcoran, 75, shared her expert insights on the current state of the market during an appearance on Fox Business’ “Cavuto: Coast to Coast.”

She told host Neil Cavuto that if mortgage rates drop to anywhere within the 5% range, it could trigger “incredible” homebuying activity.

As of Dec. 12, mortgage rates dropped to 6.6% from 6.69% the previous week, falling incrementally for the fifth week in a row.

Noting that mortgage rates have been “bouncing around” between 6% and 7% for some time now, Corcoran conceded that she doesn’t know whether “we will ever see a 5% number.” However, if such a drop were to occur, “it would be incredible for the market.”

“Rates have been bouncing around for a while now … so people are confused, they don’t have big expectations, they’re no longer waiting for a tremendous rate drop. But if that happens, God, it would be incredible for the market,” she said.

“The buyers themselves have gotten accustomed to the rates being what they are, and they just got tired of waiting,” she went on. “But I am wondering if we’ll ever see a 5% number, because anything with the 5% in front of it is going to make this market go ballistic.”

‘We need more first-time buyers’

Corcoran, who is also a savvy investor on “Shark Tank,” said on the show that what the market needs right now is more people willing to buy a home for the first time.

“What we’re losing right now and what we desperately need right now is more first-time homebuyers,” she said, before offering a shocking statistic: “Less than 24% of the people are first-time buyers, an all-time low.”

Existing-home sales are up

Interestingly, in a potentially bright spot, existing-home sales have gone up in the past month, by 3.4%, she noted.

This is the first year-over-year gain in existing-home sales in “the better part of three years,” Cavuto pointed out.

However, she added that “first-time buyers were not really a part of” those sales.

Corcoran noted that the uptick in home sales isn’t a huge surprise given that there are more “houses on the market.”

She added that while buyers have choices, they’ve also become accustomed to the status quo and aren’t holding their collective breath for a mortgage drop.

“So there were 25% more choices for the buyer coming out and looking. On top of that, buyers themselves have gotten accustomed to the rates being what they are, and they got tired of waiting,” she said.

Buyers would go ‘ballistic’

Addressing Corcoran’s view of the impact lower mortgage rates could have on the market, Realtor.com® Chief Economist Danielle Hale agreed that it would be a very big deal for buyers.

“Every drop in mortgage rates is going to make a difference for some home shoppers who are on the margin,” Hale explains.

While Hale doesn’t anticipate a giant slash in the rate, she agrees a sharp drop would certainly jolt the market.

“If we see a slow, gradual decline in mortgage rates, which is more in line with the Realtor.com® forecast, I think we’ll see a gradual build in buyer and seller activity. If we were to see a sharp drop in mortgage rates to 5%, that could bring in a lot of buyers and sellers at once—and really jolt the housing market. It’s going to be not only about the rate itself, but how we get there.”

The reverse, an increase in the mortgage rates, could slow things way down.

“It could slow down the whole market, it would slow down the whole economy, it would slow down all the support services for the housing market—it would be a terrible thing,” she says of a higher mortgage rate.

However, Corcoran also doesn’t anticipate the rates going in that direction.

“I don’t think people are thinking it’s going to go much up,” she said. “That could happen, but I don’t think you’re going to see interest rates above 7% again. I’m hoping it’s going to go and hover around 6% or even go lower.”