WASHINGTON — More U.S. homeowners now hold mortgages with interest rates above 6% than below 3%, a shift that could gradually ease one of the housing market’s most persistent constraints, according to a new report.
The Washington Post said the crossover marks a “symbolic turning point” after years in which ultralow, pandemic-era mortgage rates discouraged homeowners from selling. As the CU Daily has also reported, those rates, often below 3%, have kept many borrowers in place because moving would mean giving up cheap financing for far more expensive loans — a phenomenon known as the “mortgage lock-in effect.”
As the Post noted and as credit union lenders know well, mortgage rates have more than doubled since 2021, when 30-year loans briefly fell below 3%, according to Federal Reserve data. Rates have remained above 6% for more than three years, and most new 30-year mortgages are now written in that range.
The Trend Lines
As a result, the share of mortgages above 6% has steadily grown, while the number below 3% shrinks each month, according to the report.
Nick Gerli, chief executive of the real estate app Reventure, told the Post the shift could help loosen the housing market.
“The direction going forward will be higher average interest rates for homeowners, and that’s actually a good thing, because it’s going to reduce the lock-in effect,” Gerli said in comments posted on social media that were cited by the Post. “We are going to see potentially a lot more inventory in the future, as that lock-in effect just continues to weaken.”
Role of Life Changes
The analysis noted homeowners with low rates are more likely to sell when life changes make their current homes impractical — such as job changes, marriage, divorce, retirement or growing families — even if it means surrendering a favorable loan. That churn has slowly reduced the pool of sub-3% mortgages.
Still, economists caution that the impact will be gradual, the Post added, citing Daryl Fairweather, chief economist at Redfin, who said the crossover is unlikely to trigger a surge in listings.
“It’s becoming less of a problem the more that time goes on, but it’s a slow unwinding,” Fairweather stated, adding that borrowers with rates below 4% — not just 3% — remain effectively locked in, a category that still includes more than half of mortgage holders. Even rates under 5% are attractive enough to give many sellers pause, the Post added.
“It’s probably going to be another four, five years of it being a major factor in the housing market,” she said.
40% of Homes Have No Mortgage
Tomasz Piskorski, a real estate expert at Columbia Business School, told the Post that roughly 40% of homes carry no mortgage at all, meaning lock-in is only part of the story behind limited turnover and high prices. He said inflation — including higher labor and construction costs — has played a larger role in pushing the median U.S. home price up about $100,000 since 2019, to more than $410,000.
