Homeowners Are Still Locked In by High Mortgage Rates—Especially in These 5 Top Markets

Many homeowners who managed to snag mortgage rates well below today's levels are staying put to avoid sharply higher monthly payments—and some of the nation's priciest markets are feeling the strain of this deepening "lock-in effect."

Nationally, the typical U.S. mortgage holder pays about $1,300 in principal and interest per month. If they were to purchase a home today, that payment would jump by more than 73%, or $1,000, according to a new report on America's "locked-in" homeowners from Realtor.com® researchers. 

Here's how the U.S. housing market ended up in this predicament: At the height of the pandemic, mortgage rates hit record lows as homebuyer demand soared, fueling a boom in purchase and refinance activity. 

As a result of these shifts, more than one-quarter of all outstanding mortgages originated since 1995 were opened or refinanced at lower rates during 2020 and 2021.

When mortgage rates began climbing again in 2022, both homebuying and refinancing dropped off a cliff, leaving many homeowners feeling "locked in" to their lower rates. 

Simply put, homeowners holding on to the pandemic-era rates now find themselves unwilling or unable to sell, because doing so would require taking out a new mortgage at a much higher rate, significantly increasing their financing costs.  

Nationally, 80.3% of current mortgages carry rates below 6%, and nearly one-third (32.1%) of outstanding mortgages have an interest rate between 3% and 4%.

To calculate the gap between what existing homeowners pay on their current mortgages and what a new buyer would pay today, experts compared median monthly mortgage payments at the metro's median rate to the estimated monthly mortgage payments in October 2025.

Pricey coastal markets are most locked in

The "lock-in effect" is felt especially acutely in expensive coastal markets, leaving them essentially frozen in terms of homeowner mobility and inventory growth. 

Located in the Golden State’s affluent Bay Area, San Jose stands out as the nation's most "locked-in" major metro. 

According to the latest data analysis, the typical San Jose property owner looking to sell and then buy a comparable home can expect their monthly mortgage payment to soar roughly 180%, from $2,604 to $7,281. 

Los Angeles is a very close second, with the typical home seller there facing an eye-watering payment increase of approximately 176%.  

Cara Ameer, a bicoastal real estate broker at Coldwell Banker Vanguard Realty, confirms that many homeowners in Southern California are choosing to stay put because their existing mortgage rates are significantly lower than today's levels stuck in the low 6% range.

"Financially, it doesn’t make sense to move for a large portion of the population when the cost of doing so is going to be substantially more, unless someone can cash out and pay for the home outright, or take a very small loan to have a tax write-off," Ameer tells Realtor.com. "No one wants to increase their housing overhead right now, especially due to inflation and the costs of so many goods and services increasing, yet wages have not kept up." 

Victor Currie, real estate agent at Douglas Elliman Real Estate, says that he and his wife are among the Angelenos trapped in a home that no longer meets their needs, but which they are unable to trade up because of their locked in ultra-low mortgage rate.

Just before the pandemic, Currie downsized from a spacious four-bedroom home to a two-bedroom condominium and refinanced his mortgage at a rate below 2%. Five years later, the agent says he'd like to move again, but it's just not financially feasible at this time.

"I see homes all the time that would suit us much better, but it's hard to justify doubling or tripling a monthly payment just to pick up a little more space," Currie tells Realtor.com.

He notes that while there is always a share of the population that has no choice but to sell due to a major life event, such as a job transfer, a divorce, or a death in the family, it is becoming increasingly uncommon.

"It's more rare for someone who doesn't actually need to move to do something lateral just because they’d like to," says Currie.

Portland, ME, records the third-largest gap in the nation between existing and new mortgage payments, at over 154%, followed by Oxnard, CA, at 152%, with Bridgeport, CT, rounding out the top five at 149%.

"Because homes in these markets are already expensive, buyers typically rely on larger mortgage balances, which amplifies the impact of rising rates," says Realtor.com senior economic research analyst Hannah Jones. "Even modest rate increases translate into steep jumps in monthly payments, making it far more difficult for existing homeowners to move within the same market or for new buyers to enter."

A closer look at outstanding mortgage debt in those regions reveals why the "lock-in effect" is so strong in places like L.A. and Bridgeport: In the West and Northeast, 84.6% and 81.0% of current mortgages, respectively, have interest rates below 6%, compared with 80.3% nationally.

Additionally, nearly 1 in 4 mortgages in the West carries a rate below 3%, compared with roughly 20% nationally.

"Such concentrations of ultra-low rates effectively freeze homeowners in place, since selling would often mean more than doubling their monthly housing payment," notes Jones.

Home supply hamstrung by the 'lock-in effect'

The "lock-in effect" is not happening in a vacuum: It not only slows home-selling activity but also reshapes the entire housing market in a given location. 

According to researchers, when a large percentage of homeowners hold mortgages well below the current rates, they are understandably hesitant to list their homes, leading to chronically low inventory levels, sluggish home and job mobility, and weaker turnover, which limits options for first-time buyers. 

Tight inventory keeps prices high despite softening demand and leaves people in homes that don't meet their lifestyle needs. 

How to unfreeze stagnant markets

Amid persistent affordability challenges, including elevated home prices and mortgage rates, unfreezing the housing market will require a combination of factors that are unlikely to materialize in the near future, from a dramatic drop in rates to stronger income growth, slower price appreciation, and meaningful policy shifts.

There is no easy solution to the "lock-in" problem, Ameer notes.

"Mortgage rates would have to significantly come down in order to restore more movement to the housing market, but we aren’t likely to see rates go into the 5% range or lower in the near to long-term future," she says. 

She argues that more ways should be developed to assume existing property owners' loans that allow flexibility with respect to a prospective buyer’s down payment so they could get into these properties. At the same time, incentives should be offered to help sellers whose buyers assume these loans to another property, possibly in the form of a tax deduction or rebate. 

Another way to "unlock" these homeowners would be to create loan programs that would allow them to take their low interest rate with them when purchasing another property.  

"That would be a huge boon to kickstart the market," predicts Ameer.  

Currie concurs that lower interest rates are just "one part of the equation." In a high-priced metro like Los Angeles where the inventory is extremely tight and many would-be buyers are sidelined, addressing regulatory hurdles to affordable housing construction is essential to unlock the market.

"We can’t get prices down without more inventory, and we can’t get more inventory without making it easier for developers to build lower-priced homes profitably," he says.