The Great Housing Freeze: Half of Homeowners Have a Sub-4% Mortgage Rate—and Few Reasons To Move

For many American homeowners, selling their house would mean losing a low mortgage rate that they may never be able to get again. 

The average mortgage rate is at a three-year high of 7.4%, making it even more costly for homeowners to purchase a new house—especially those who were able to secure rates under 4% during the COVID-19 pandemic.

Data from the Federal Housing Finance Agency's National Mortgage Database analyzed by the Realtor.com® economic research team shows that millions of homeowners are locked in to lower rates, with almost half (49%) holding a fixed rate below 4%. 

Robin B. Kirkman, a real estate agent with All About You Realty in Liberty, NC, tells Realtor.com that she has several clients who are ready to move but hesitant to leave behind the low mortgage rates they obtained during the pandemic. 

“I have a couple of clients who I brought along with me during the COVID era, and they are ready to move again,” Kirkman says. “But they are on the fence because, well, 3.25% rate versus 7% is a big difference.”

That reluctance is contributing to major gridlock in the U.S. housing market. Millions of homeowners do not have enough of a financial incentive to sell their current home, even when it no longer meets their needs. 

Selling may allow a family to downsize, move closer to relatives, or buy property that better suits their lifestyle. But financing another home could mean a higher interest rate and larger monthly payment, even if the price tag on a new home is about the same as the old one.

Nearly half of all outstanding mortgages had an interest rate of less than 4% during the second quarter of 2026, according to the Realtor.com analysis. 

An additional 29% of mortgages had an interest rate between 4% and 6%. In other words, 78% of outstanding mortgages had an interest rate below 6%.

These low rates are a result of the historic decline in borrowing costs during the pandemic. The average rate on a 30-year fixed mortgage was less than 3% from July 2020 until September 2021—the only time in modern history that mortgage rates have fallen that low.

The effects of this brief, historic period of ultralow rates can also be seen in the average age of all outstanding mortgages.

According to the report, a record-high 43% of mortgages are now 5 to 7 years old. These are mortgages that were made between mid-2019 and mid-2022, when interest rates were at historic lows. The report indicates that people are moving out of these mortgages at much lower frequency than they otherwise would have.

Only 28% of currently outstanding mortgages were originated during the four years leading up to June 2026, as rising interest rates limited both new lending and refinancing.

In the second quarter of 2026, 19% of outstanding mortgages still had rates below 3%, while 30% had rates between 3% and 4%.

"Lock-in is easing, but only as low-rate loans age out, are traded up, or paid off. How fast it moves depends on sales volume and rates," writes Realtor.com senior economist Hannah Jones.

It is expected that the “lock-in” effect will continue through next year. 

Realtor.com is estimating that 27% to 29% of mortgages will have rates of 6% or higher by mid-2027, compared to 23% in the second quarter of 2026.

So what will unlock the housing market? A steady decline in mortgage rates could make moving more affordable and encourage more homeowners to list their homes. 

In September, the average price of a home fell 1.4% while the number of homes for sale rose slightly, suggesting the housing market could be slowly adjusting, according to the report. 

But with millions of homeowners who still have loans that were secured at historically low rates, a rapid thaw is unlikely.