The Mortgage “Lock-In Effect” on the Housing Market

Lucky homebuyers who are able to buy now are locking in dramatically low mortgage rates. But if mortgage rates increase, those with lower rates may not be willing to upgrade their house later in life and take on a more expensive mortgage.

Although mortgage rates now stand higher than they did just a couple months ago, more people are applying for loans to buy homes.

The 30-year fixed-rate mortgage averaged 3.75% during the week ending Nov. 14, up six basis points from the previous week, Freddie Mac FMCC, -1.40% reported Thursday. Last week, mortgage rates had fallen after three straight weeks of increases.

Still, mortgage rates remain much lower than where they stood a year ago. During this same week last year, the 30-year fixed-rate mortgage averaged 4.94%.

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