New Mortgage Data Signals a Turning Point in the Rate Lock-In Era

by Chuck Barberini

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New FHFA data shows 21.2% of mortgages now exceed 6%, topping the 20.0% below 3% as rates stay in the 6.2% range and the lock-in era begins to shift.

For nearly four years, the housing market’s been frozen by one stubborn force: millions of homeowners locked in mortgage rates below 3% during the pandemic boom.

And they haven’t had much reason to give them up. That lock-in effect has kept inventory tight and prices stubbornly elevated.

But according to the latest mortgage data, that balance finally shifted.

FHFA’s Outstanding Residential Mortgage statistics show mortgages above 6% now outnumber those below 3% for the first time since the pandemic.

It’s a small numerical crossover with big psychological and structural implications for how the market moves in 2026.

In Q3 2025, 21.2% of outstanding mortgages carried interest rates of 6% or higher, edging past the 20.0% share with rates below 3%. Mortgage rates peaked at 7.04% in January 2025, eased into the 6.2% range by year-end, and they’ve remained above 6% since September 2022.

That means the ultra-low-rate era’s no longer the dominant force shaping the market.

Danielle Hale, Chief Economist at Realtor.com, explained it this way:

“Mortgage rates above 6% now represent a larger share of outstanding loans than the ultra-low rates that defined the pandemic-era housing boom.

“This crossover reflects a gradual resetting as some households trade in low-rate mortgages for higher-rate loans or enter the market for the first time, even as rate lock-in continues to limit the pace of inventory recovery.”

The lock-in effect is still powerful, but it is weakening

Even with this shift, the housing market is not suddenly wide open. Most homeowners are still sitting on mortgages well below today’s rates, which keeps resale supply constrained.

To understand how strong the lock-in effect still is, it helps to look at how mortgage rates are distributed across the entire housing stock.

51.5% of outstanding mortgages carry rates of 4% or lower
Roughly 69% carry rates of 5% or lower
About 80% are still below 6%

That’s why homeowners are still reluctant to move. The typical homeowner would see their monthly mortgage payment increase by nearly $1,000 if they sold and bought a median-priced home in today’s high-price, high-rate environment.

It also explains why the pandemic mortgage era left such a deep scar on housing supply. The 30-year fixed mortgage rate fell below 3% in July 2020 and stayed there through September 2021, the only period since 1971 when rates dropped that low.

Yet despite that gravitational pull, more people are now choosing to move anyway.

Why homeowners still feel rich enough to stay put

The lock-in effect isn’t just about mortgage rates. It’s also about how much wealth homeowners are sitting on.

According to the Federal Reserve’s Financial Accounts through Q3 2025, U.S. households are holding record levels of net worth, even as home prices cooled slightly late last year.

Here’s what the Fed says about household balance sheets right now.

Household and nonprofit net worth rose $6.1 trillion in Q3 to $181.6 trillion
Corporate equity holdings climbed $5.49 trillion to $66.49 trillion
Household real estate is still worth $48.04 trillion, even after falling $0.36 trillion
Total household debt stands at $20.69 trillion, growing at a 4.1% pace
Mortgage debt is only growing 3.2%

That’s a powerful mix. Homeowners aren’t just sitting on cheap mortgages. They’re sitting on massive balance sheets. That wealth cushion lets people wait out high rates instead of being forced to move.

At the same time, mortgage balances are still growing, which shows new loans are being written at today’s higher rates.

That’s how the 6%+ share keeps rising even while most people stay put.

What’s actually shifting inside the mortgage pool

The growth in higher-rate mortgages is happening quarter by quarter inside the mortgage data.

Between Q3 2024 and Q3 2025, the share of homeowners with mortgages above 6% rose by more than 4 percentage points. Even more telling, from Q2 to Q3 2025 alone, the share of mortgages above 6% jumped by 0.9 percentage points.

Several forces are driving that change at the same time.

Some homeowners are swapping low-rate mortgages for higher-rate ones because life events such as marriage, divorce, or growing families make moving unavoidable
Some households are paying off mortgages entirely, which caused the total number of mortgage loans to fall both quarter over quarter and year over year in Q3
Builders are offering rate buydowns and incentives that are keeping the 4% to 6% rate buckets stable and pulling buyers into new construction

This combination explains why the market is slowly regaining motion even without a major rate collapse.

Inventory is improving, but competition has not disappeared

On the supply side, the market is clearly healing, even if it still feels tight in many places.

National housing supply has moved into balanced market territory, and some local markets have shifted all the way into buyer’s market conditions.

At the same time, affordable areas remain highly competitive, with homes selling quickly because demand still exceeds supply.

One major change is coming from builders. New-construction inventory is now above pre-pandemic levels, helping to fill the gap created by locked-in homeowners who don’t want to give up their low-rate mortgages.

That new supply is one of the reasons price growth has slowed, even as demand stays alive.

Why this crossover changes what happens next

The most important takeaway from this data is how many people have already accepted that higher rates are the new normal.

Looking ahead, Realtor.com economists expect the share of mortgages below 6% to fall close to 75% in Q4 2025, which means the 6%+ group will continue to grow as new buyers enter the market.

At the same time, buyer sensitivity to rates remains extremely high.

40% of potential buyers say they would purchase a home if mortgage rates dropped below 6%
32% say they would be willing to buy if rates dropped below 5%

To explain how this plays into supply and competition, Hale added:

“Even with rates still elevated, modest mortgage rate decreases into the low-6% range could encourage additional homebuying activity. Further easing in inflation and mortgage rates would be key to unlocking more seller participation, helping to relieve price pressure and competition in an under-supplied market.”

The market is no longer being controlled by a tiny group of ultra-cheap mortgages. It’s being shaped by a growing group of homeowners who are already living in a 6% world.

That change doesn’t end the lock-in era overnight, but it finally cracks it open.

Housing Market - January 14, 2026 - Sarah Lentz

https://nowbam.com/new-mortgage-data-signals-a-turning-point-in-the-rate-lock-in-era/