More than nine of every 10 U.S. homeowners with mortgages have an interest rate below 6 percent—down just slightly from the record high of 92.9 percent hit in mid-2022. This is according to a Redfin analysis of Federal Housing Finance Agency (FHFA) data as of the fourth quarter of 2022.
Of course, homeowners holding onto their comparatively low mortgage rates is the main reason for today’s shortage of new listings.
Of those homeowners with mortgages, some 62 percent have a rate below 4 percent and 23.5 percent an interest rate below 3 percent, near the highest share on record.
“High mortgage rates are a double whammy because they’re discouraging both buyers and sellers–and they’re discouraging sellers so much that even the buyers who are out there are having trouble finding a place to buy,” said Redfin Deputy Chief Economist Taylor Marr. “The lock-in effect is unlikely to go away in the near future. Mortgage rates probably won’t drop below 6% before the end of the year, and most homeowners wouldn’t be motivated to sell unless rates dropped further. Some of them simply don’t want to take on a 6 percent-plus mortgage rate and some can’t afford to.”
According to a Redfin survey conducted by Qualtrics in early June, 27 percent of U.S. homeowners who are considering listing their home in the next year would feel more urgency to sell if rates dropped to 5 percent or below. Some 49 percent would feel more urgency if rates were to drop to 4 percent or below, and the share increases to 78 percent if they were to drop to 3 or below.