Are COVID-Era Homeowners Still Hanging On To Their Low Mortgage Rates?
Yes — and in large numbers. The so-called "mortgage rate lock-in effect" remains one of the most powerful forces shaping the U.S. housing market in 2026. Here is what is happening.
The Lock-In Effect Is Very Real
More than a third of U.S. homeowners holding a mortgage rate below 6% say they would not give up their current rate under any circumstances, with 47% stating they simply could not afford today's borrowing costs. The phenomenon is especially entrenched among those who secured the very lowest rates. For homeowners with sub-3% mortgages, 52% refuse to part with their rate for any reason. The financial math makes their reluctance hard to argue with — a buyer who put 20% down on a $400,000 home would pay $1,528 monthly in principal and interest with a 4% mortgage, while today's rates would push that payment significantly higher.
Most Homeowners Still Sitting on Low Rates
Over 80% of current homeowners have mortgages below 6%, and many don't want to list their homes since doing so could sometimes mean doubling future financing charges. The share of homeowners with sub-4% rates peaked at 65% of the market in 2022, and years later, this number has only gradually trickled down. 51% of surveyed homeowners say they won't sell their properties until rates drop back below 5%, and 20% are holding out for a return to sub-3% rates — even though 69% of borrowers do not believe rates will ever return to pandemic-era lows.
The Ripple Effect on the Housing Market
This collective reluctance to sell has frozen a substantial portion of housing inventory nationwide. Mobility is down, and the traditional "housing ladder" is partially frozen, limiting both listings and move-up transactions, with moves significantly shifted from discretionary to necessity-driven. It would likely take a substantial drop in mortgage rates from today's levels, around 6.4%, to unlock meaningful seller activity.
Is the Lock-In Beginning to Crack?
Slowly. In the second half of 2025, more homeowners had mortgages at or above 6% than those with loans below 3% — the first time that has occurred since late 2020, suggesting the COVID cohort's grip is gradually loosening as life circumstances — job changes, growing families, and the passage of time — begin to outweigh the financial cost of giving up a low rate.
