The Great Rate Thaw

For the past few years, the U.S. housing market has been stuck in a stalemate. Homeowners who locked in historic, sub-3% mortgage rates during the pandemic were understandably reluctant to sell, creating a "golden handcuff" scenario known as the Lock-In Effect.

But as we start 2026, the data shows a massive shift. Something big just happened in the mortgage landscape—and it’s good news for inventory.

A Major Milestone in Mortgage Rates

As of the end of 2025, we have officially reached a tipping point: There are now more 6%+ rate mortgage holders than there are sub-3% holders. The share of mortgages with rates at 6% or higher has climbed to 21.2%. This is the highest level we’ve seen since 2015 and nearly triple the pandemic low.

Why This Matters: Breaking the "Golden Handcuffs"

The "Lock-In Effect" occurs when the gap between a homeowner's current rate and the market rate is so large that moving becomes financially painful. However, as the distribution of rates shifts, the market begins to normalize for several reasons:

• Closer to "Market" Reality: Since more existing owners now hold higher rates, their monthly payments are already aligned with current market conditions.

• Increased Incentive to Move: When the gap between your current rate and a new rate is only 0.5% (or non-existent) rather than 4%, the psychological and financial barrier to selling disappears.

• The Power of Volume: Even in a slower market, roughly 5 to 6 million Americans take out a new mortgage every year. By doing so at 6%+ rates, they are effectively refreshing the market's "base rate."

This trend suggests that we should expect more upward pressure on new listings and inventory in the coming years. As the pool of "locked-in" homeowners shrinks, the pool of potential sellers grows.

While we aren't back to the ultra-low rates of 2020, we are moving toward a more fluid, healthy housing market where people can move because of life changes—not because they feel trapped by a mortgage coupon.