If you bought or refinanced a home when mortgage rates were much lower, moving today can come with an uncomfortable tradeoff: giving up a favorable mortgage and taking on a new loan at a much higher rate. That’s the “mortgage rate lock-in effect,” and it continues to influence homeowners’ decisions about whether to sell. Nearly half (49.9%) of outstanding U.S. mortgages had rates of 4% or less in the first quarter of 2026, according to Realtor.com’s analysis of Federal Housing Finance Agency data. By comparison, the average 30-year fixed mortgage rate was 6.95% as of Sept. 17. If you’d like to move but are reluctant to give up your current rate, gaining a better understanding of the numbers behind lock-in can help you weigh the cost of staying against your reasons for selling.
The mortgage rate lock-in effect happens when a homeowner has a mortgage rate significantly below current market rates, creating a financial incentive to stay in the home rather than sell and finance another one. To see why the rate difference can matter so much, here’s how the estimated monthly principal and interest payment changes on several home prices when the mortgage rate rises from 3% to 7%. For a homeowner considering a move, that difference can be substantial. A $500,000 home financed under these assumptions would carry nearly $1,000 more per month at 7% than at 3%. Of course, that doesn’t mean homeowners are literally locked into their mortgages. Rather, the savings associated with an existing low-rate loan can make moving harder to justify financially. Past research from the Federal Housing Finance Agency illustrates how powerful that incentive can be. Its study of mortgage lock-in found that for every percentage point market mortgage rates rose above a homeowner’s existing rate, the probability of that homeowner selling decreased by 18.1%. Many homeowners secured unusually low mortgage rates during the pandemic-era housing market, and those loans aren’t disappearing quickly. As of the first quarter of 2026: Those figures are based on Realtor.com’s analysis of the FHFA National Mortgage Database. At the same time, mortgage rates have moved higher again, according to Freddie Mac. For homeowners considering a move, that gap matters. Selling a home with a 3% or 4% mortgage could mean taking on a considerably higher borrowing cost for the next one. The bigger the gap between the rate you have and the rate you could get today, the stronger the financial incentive may be to stay put.What is the mortgage rate lock-in effect?
Home price
Payment at 3%
Payment at 7%
Monthly difference
$300,000
$1,387
$1,972
+$585
$400,000
$1,849
$2,629
+$780
$500,000
$2,311
$3,286
+$975
$600,000
$2,774
$3,943
+$1,169
Why is the mortgage rate lock-in effect still so strong?
