Why the ‘Lock-in’ Effect Is Prompting Homeowners to Stay Put

Nearly six out of every seven U.S. homeowners have locked in mortgage interest rates well below today’s 6% level, and that share is contributing to a scarcity of new listings, Redfin reports. Homeowners across the country are becoming increasingly hesitant to list their homes if it means giving up their low mortgage rates and taking on a more costly monthly housing bill.

During the four weeks ending September 11, new listings fell 19% year-over-year, the largest drop recorded since May 2020. Even as the housing market slows, a lack of new inventory is sustaining elevated home prices and leaving would-be buyers with few affordable options.

The high share of homeowners who feel locked into their low mortgage rate is contributing to a steep decline in the number of homes hitting the market. New listings slumped 19% year over year during the four weeks ending Sept. 11, the largest drop since May 2020.

This “lock-in” effect is manifesting in markets across the country. For example, Redfin found that in Atlanta, Chicago, Los Angeles and Washington, D.C., homeowners with a mortgage rate below 3.5% were 7.6% less likely to put their homes up for sale in August than homeowners with a rate above 3.5%.

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