Is the lock-in effect loosening its grip on housing? Realtor.com thinks so

U.S. homeowners who carry mortgages with rates of 6% or more now outnumber those with rates below 3%. This should drive a “meaningful shift in the housing market after years of historically low borrowing costs,” according to a Realtor.com report released Wednesday.

The company analyzed residential mortgage data from the Federal Housing Finance Agency (FHFA) and found that 21.2% of outstanding loans in the third quarter of 2025 had interest rates of at least 6%. That’s higher than the 20% of loans with rates below 3%.

“Mortgage rates above 6% now represent a larger share of outstanding loans than the ultra-low rates that defined the pandemic-era housing boom,” Danielle Hale, Realtor.com’s chief economist, said in a statement.

“This crossover reflects a gradual resetting as some households trade in low-rate mortgages for higher-rate loans or enter the market for the first time, even as rate lock-in continues to limit the pace of inventory recovery.”

The analysis noted that while mortgage rates have dropped from their peak above 7% in January 2025 and are now settling closer to 6%, they haven’t fallen below 6% since September 2022. This continues to “influence homeowner behavior, market mobility and housing supply,” Realtor.com stated.

About half (51.5%) of outstanding mortgages include rates of 4% or less, while more than two-thirds (69%) have rates of 5% or less. This is a likely factor keeping homeowners from becoming sellers, as the typical property owner would see an increase of almost $1,000 in their monthly mortgage payment if they sold and bought a median-priced home today while trading in their low-rate loan, according to the report.

Realtor.com also found that the share of loans with rates above 6% grew by more than four percentage points between the third quarters of 2024 and 2025, a reflection of continued homebuying activity despite higher rates.

“Life events, such as marriage, divorce or growing families, continue to drive homebuying, while some buyers who had delayed moves may be acting as rates softened modestly from recent highs,” the report explained.

Last week, President Donald Trump’s declaration that Fannie Mae and Freddie Mac would purchase $200 billion in mortgage-backed securities sparked a sharp and swift decline in mortgage rates.

Pricing for 30-year fixed-rate loans briefly fell below 6%, which prompted some lenders to anticipate increased refinance business. As of Wednesday afternoon, HousingWire‘s Mortgage Rates Center, which analyzes locked loans across all borrower credit profiles, showed that 30-year conforming loan rates were at 6.24%.