Millions of Homeowners Are Sitting on Cheap Mortgages, and Moving Could Cost Them Hundreds

Nearly half of America’s outstanding mortgages carry interest rates below 4%, creating a financial obstacle that could keep the housing market sluggish well into 2027.

For millions of homeowners, selling would mean surrendering a mortgage rate that may be difficult to secure again. With borrowing costs surpassing 7%, moving into a similarly priced property could increase monthly housing expenses by hundreds of dollars.

The consequences extend beyond individual households. When existing homeowners hesitate to sell, fewer properties become available, limiting choices for buyers and complicating the outlook for real estate investors.

A new Realtor.com economic analysis, using Federal Housing Finance Agency mortgage data, reveals how deeply high interest rates (and record lows during the pandemic era) continue to influence the American housing market.

The Mortgage Trap

During the second quarter of 2026, approximately 49% of outstanding mortgages carried interest rates below 4%. Another 29% had rates between 4% and 6%, leaving nearly 78% of existing mortgages with rates below 6%.

The financial difference can be substantial. On a hypothetical $300,000 mortgage with a 30-year repayment term, a 3.25% interest rate produces a monthly principal-and-interest payment of approximately $1,306.

At 7%, that payment climbs to approximately $1,996. That’s roughly $690 more each month, or $8,280 annually, before property taxes and insurance.

For homeowners considering a move, that additional expense can outweigh the benefits of purchasing another property.

Robin B. Kirkman, a North Carolina real estate agent, told Realtor.com that some clients want to relocate but remain hesitant because of the difference between their existing mortgage rates and current borrowing costs.

Supply Remains Tight

The effects are particularly evident in the age of existing mortgages.

According to the report, a record 43% of outstanding mortgages originated between mid-2019 and mid-2022, when borrowing costs reached historic lows.

Meanwhile, only about 28% originated during the four years ending in June 2026, reflecting the slowdown in new lending and refinancing.

This pattern suggests that many homeowners are holding onto favorable financing arrangements rather than replacing them with more expensive loans.

For investors, restricted resale inventory can influence acquisition opportunities, pricing, and competition. However, elevated borrowing costs also make financing investment properties more expensive, potentially reducing returns.

A Slow Recovery

Realtor.com expects the mortgage lock-in effect to continue into 2027.

Its projections suggest that mortgages carrying rates of 6% or higher could account for approximately 27% to 29% of outstanding loans by mid-2027, compared with roughly 23% in the second quarter of 2026.

Even under those scenarios, most existing borrowers would continue holding mortgages below 6%.

There are indications of gradual market adjustments. September home listing prices declined 1.4%, while the number of available properties increased slightly.

Lowering interest rates could eventually encourage more homeowners to sell, increasing inventory and giving buyers additional options.

However, the unusually large concentration of low-rate mortgages suggests the market’s recovery may remain gradual, even as newer, higher-rate loans become a larger share of outstanding mortgages.

If you have a mortgage interest loan rate below 6%, are you considering selling or holding strong?