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Nearly half of U.S. mortgages have one thing in common, and it’s creating a huge problem

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Nearly half of U.S. mortgages have one thing in common, and it’s creating a huge problem

As with golden handcuffs that keep many employees from jumping ship, a golden mortgage may be preventing many homeowners from moving addresses.

A recent surge in mortgage rates that’s seen the average 30-year fixed-rate mortgage hit as high as 7.6% is keeping many would-be homebuyers on the sidelines—and particularly those who locked in historically low rates several years ago. Loans originated between mid-2019 and mid-2022, when rates dipped below 3%, now account for 42.8% of the market, according to a report released Thursday by Realtor.com.

Nearly half of U.S. homeowners are currently sitting in a home with a mortgage rate of less than 4%, including about one in five homeowners who are locked in at a rate of less than 3%, according to the latest figures from the Federal Housing Finance Agency. What’s more, many homeowners sitting on those “rock-bottom” rates have no natural payoff or move horizon in sight, factors that are weighing on the housing market, according to Hannah Jones, senior economist at the Austin-based real estate site.

“Homeowners are still making decisions around those unusually low rates today,” Jones said in a statement. That cohort includes both people who bought a home during that period, as well as those who refinanced between 2020 and 2021 to lock in those exceptionally low rates, she added.

5% by this time next year as rates are likely to remain above that level, according to Jones. And the pandemic-era refinancing wave is aging into mortgage rate lock-in, which remains the dominant force in the housing market, she noted.


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