More Than 80% Of Americans Feel ‘Locked-In’ by Their Low-Rate Mortgages

Nearly 82% of homeowners currently feel “locked-in” by their existing low-rate mortgage, and would-be sellers who are unwilling to refinance and relocate are exacerbating a housing shortage that continues to push home prices to new highs. The majority of today’s homeowners have mortgages with interest rates below 4% or even below 3%, record lows reached during the COVID-19 pandemic. As a result, year-to-date new listings are roughly 20% behind last year’s pace, according to CNBC.

A growing number of homeowners say they would be more willing to sell if rates return to a more stable 4%-5% range, but with little prospect of falling, the average rate for a 30-year, fixed-rate mortgage currently sits near 7%.

That’s the tipping point, a recent report from Zillow found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher and yet, 80% of mortgage holders have a rate below 5%. Since it’s unlikely rates will drop anytime soon, buyers can expect a continued standstill for now.

“The reality of it is, until inflation comes down in a meaningful and sustainable way, mortgage rates are going to stay high,” said Greg McBride, Bankrate’s chief financial analyst.

In the meantime, the shortage of homes for sale is putting more pressure on prices.

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