On a national level, all homeowners with mortgages under 6% represent 88.5% of homeowners, a number which is down from 92.8% in 2022, according to a new report [1] from Redfin.
That means more than 88.5% of homeowners with mortgages have a rate below the current weekly average of 6.66%, prompting many to stay put instead of selling and buying another home at a higher rate—a phenomenon called the “lock-in effect.”
But realistically, staying put is not a feasible option long-term—the share of homeowners with a rate of 6% has fallen from its record high partly because some owners are forced to “bite the bullet” and give up their ultra-low rates in order to move. Many are selling because of major life events such as the birth of a bay or divorce which has given them no other choice, while others are putting their home on the market because they want to live in a different house or city that better aligns with their lifestyle.
Another reason the share has dipped: Everyone who purchased a home in the last year—repeat buyers and first-time buyers alike—was entering the market at a time when the average mortgage rate was above 6%.
“I’m working with a lot of homeowners who are selling because of things like divorces, new jobs or deaths in the family,” said David Palmer, a Redfin Premier real estate agent in Seattle.
“I’m also working with homeowners who are bursting at the seams and selling because they’ve outgrown their current home.”
It’s worth noting that for some homeowners, the fact that home prices soared during the pandemic means they have enough equity to justify selling and taking on a higher rate—especially if they’re downsizing or moving somewhere more affordable.
The following is according to a Redfin analysis of data from the Federal Housing Finance Agency’s National Mortgage Database as of the third quarter of 2023, the most recent period for which data is available. The share of homeowners with rates below 6% likely fell further in the fourth quarter because a dip in mortgage rates drove more people to buy and sell homes, even as rates remained above 6%.
- Below 6%: 88.5% of mortgaged U.S. homeowners have a rate below 6%, down from a record 92.8% in the second quarter of 2022.
- Below 5%: 78.7% have a rate below 5%, down from a record 85.6% in the first quarter of 2022.
- Below 4%: 59.4% have a rate below 4%, down from a record 65.3% in the first quarter of 2022.
- Below 3%: 22.6% have a rate below 3%, down from a record 24.6% in the first quarter of 2022.
Click here [2] to view the research in its entirety.