Mortgage rate lock-in is the reluctance to sell a home because replacing a low fixed-rate mortgage with a new loan at a higher rate can make the next home substantially more expensive to finance. Federal Reserve research links this effect to fewer homeowner moves after rates rose in 2022, but its impact on prices depended on local market conditions. The evidence summarized here covers the 2021–2025 period; it does not establish a new 2026 lock-in estimate or current mortgage rate.
What mortgage rate lock-in means
A homeowner with a low fixed mortgage rate may hesitate to move if selling means borrowing again at a higher rate. The rate gap raises the cost of buying a replacement home, even if the owner can sell the current home for a strong price. The Federal Reserve Board describes lock-in as a decline in moves associated with a widening gap between market rates and homeowners’ fixed rates.
Lock-in is an incentive, not a ban on moving. It matters most when an owner needs a new mortgage and the replacement loan would carry a much higher rate. A move for a job, family change, health need, or other priority may still be worth the added cost.
What the evidence says about its effects
Fewer moves after rates rose
A Board of Governors of the Federal Reserve System working paper by Aditya Aladangady, Jacob Krimmel, and Tess Scharlemann, originally published in November 2024 and revised in May 2025, estimates that lock-in explained 44 percent of the decline in mortgage borrower mobility from 2021 to 2022, after accounting for selective-refinancing bias. The effect was driven primarily by fewer local moves; the effect on moves across labor-market areas was modest. The paper’s estimates represent the authors’ research, not a formal statement of the Board’s views. Read the Federal Reserve Board study.
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Prices and time on market depended on how tight markets already were
The same study estimates that the 2022 lock-in shock reduced time on market by 29 percent and increased house prices by 8 percent in markets that were already historically tight. Those are study estimates tied to particular starting conditions, not a claim that lock-in caused an 8 percent price increase everywhere. In the study’s counterfactual resembling the more balanced 2019 market, the shock had little to no effect on prices or tightness.
The mechanism is a supply squeeze: when fewer owners list, buyers have fewer homes to choose from. The result depends on how much supply falls relative to demand and on local conditions; a rate gap alone does not determine the price effect.
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Survey intentions are not observed moves
A Federal Reserve Bank of New York analysis of its 2023 and 2024 Survey of Consumer Expectations Housing Surveys tested a hypothetical option: homeowners could keep their current mortgage rate after moving and buying another home. Under that scenario, respondents’ stated probability of moving within three years rose by an average of 7.4 percentage points. The increase was strongest among owners with rates below 3 percent or between 3 and 4 percent; respondents with rates above 4 percent did not show a statistically significant increase.
Nearly half of respondents did not change their stated moving probability in the scenario. The authors conclude that mortgage rates constrain a significant but relatively small share of respondents, rather than being the main consideration for most. Because the survey asked about a hypothetical, these figures describe stated plans, not moves that actually occurred. Read the New York Fed analysis.
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How much the rate shock changed payments
The Consumer Financial Protection Bureau’s September 2024 snapshot provides historical context, not a current quote. It reports 30-year mortgage rates of 2.65 percent in January 2021, 7.79 percent in October 2023, and 6.20 percent on September 12, 2024. In the CFPB’s illustration, principal and interest on a $400,000 loan rose from $1,612 on January 7, 2021, to $2,877 on October 26, 2023. Those payment figures cover principal and interest only, not taxes, insurance, or other ownership costs. Read the CFPB market snapshot.
The comparison shows why an owner might think twice about moving, but it is not a personalized affordability calculation. A replacement home’s price, down payment, loan size, taxes, insurance, and the owner’s existing equity all affect the actual decision. The CFPB’s separate 2024 snapshot reported nearly 60 percent of 50.8 million active mortgages below 4 percent; that is a historical 2024 distribution, not a 2026 estimate. See the CFPB’s mortgage-market snapshot.
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- SPEAKS YOUR LANGUAGE: Keys clearly labeled in residential mortgage finance terms like Loan Amt, Int, Term, Pmt; this industry-standard calculator is super easy to use on all realty financing matters from finding a loan that works for your client to considering trust deeds investments, or finding remaining balances or balloon payments and more
- CONFIDENTLY AND EASILY SOLVE: Clients' financial questions whether they're buyers, sellers, investors or renters. Increase your perceived professionalism as a new agent, experienced broker or seasoned loan officer. Close more home sales and impress your clients with fast, accurate answers to all their real estate finance questions from PITI Payments to IRR, NPV and Cashflows
- DEDICATED BUYER QUALIFYING KEYS: Enter client's income, debt and expenses to pre-qualify them to only show properties they can afford. Include tax, insurance and mortgage insurance then compare loan options and payment solutions to give your client choices before they make an offer to buy
- FIGURE OUT THE RIGHT LOAN: For your client at the press of a button for jumbo, conventional, FHA/VA, or even 80:10:10 or 80:15:5 combo loans; check to see if ARMs or bi-weekly loans, quarterly payments or if interest-only payments are the answer; giving your client more choices; easily perform what if loan or TVM calculations find loan amount, term, interest or PITI or PI payments
- BECOME AN INVALUABLE RESOURCE: To your clients by reducing their confusion and uncertainty; ensuring they are able to make a purchase offer; knowing they can afford the down payment; and determining which is the right loan for them. Date-math for listings and contracts too. Comes with a protective slide cover, quick reference guide, pocket user's guide, and long-life battery
Why homeowners are not selling—and why some still do
A low-rate mortgage can make staying financially attractive, particularly if the owner would need to finance most of a replacement home. But the mortgage is only one part of the decision. Owners may move despite the rate gap when a household, employment, health, or location change outweighs the extra borrowing cost. Conversely, a move may be easier to manage for someone who can buy with substantial equity or cash and needs a smaller loan.
In a July 17, 2025 speech, Federal Reserve Governor Adriana Kugler described elevated rates as making it less appealing for owners with low fixed-rate mortgages to sell and purchase another home because doing so requires a new mortgage at a higher rate. She also noted the associated effect on existing-home supply. Read Kugler’s speech.
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Should you give up a low mortgage rate to move?
There is no universal break-even rate. Compare the costs and benefits of the move itself rather than treating the existing rate as the only factor.
- Estimate the replacement loan. Use the likely purchase price, down payment, and loan amount to calculate principal and interest at a rate you can actually obtain. Treat published historical rates as context, not a personal offer.
- Build the full monthly housing cost. Add property taxes, homeowners insurance, any mortgage insurance, association fees, utilities, and expected maintenance. Compare like with like against your current home.
- Account for transaction and financing costs. Include sale and purchase expenses, moving costs, and any fees tied to the new loan. Consider how much equity from the sale would reduce the amount borrowed.
- Separate financial cost from the reason to move. A higher payment may be acceptable if the move solves a major work, family, health, or quality-of-life need. If the move is optional, delaying it may preserve the low-rate financing but could also mean missing a home or location that fits better.
- Test more than one scenario. Compare the cost of buying now with alternatives such as staying, buying a less expensive home, making a larger down payment, or waiting. Do not assume future rates will fall or that a future rate will be portable.
A useful decision is based on the household’s expected budget and priorities, not on a broad prediction that rates will—or will not—bring sellers back.
Will mortgage rates bring sellers back?
Lower rates could narrow the gap between an owner’s existing loan and the rate on a replacement mortgage, reducing one reason to stay put. But the evidence does not establish a rate threshold that would bring a particular number of sellers back, and rates are not the only determinant of moving. The studies above document effects associated with the 2022 shock and a survey response to a hypothetical portable-rate option; they do not quantify a new 2026 effect or forecast future listings.
That distinction matters because market outcomes vary. The Federal Reserve Board study found stronger price and time-on-market effects where conditions were already tight, while its balanced-market counterfactual showed little to no effect. A national rate change therefore does not imply the same response in every local housing market.
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