Mortgage Lock-In Persists, With Ultralow Rate Holders Refusing To Budge

The housing market’s gradual thaw slowed at the start of the year, as nearly half of all outstanding mortgages remained locked in at rates of 4% or lower. 

In the first quarter of 2026, the share of mortgages with ultralow COVID-19 pandemic-era rates of 3% and below registered at 19.5%, barely budging from the end of last year, according to the latest quarterly outstanding mortgage report from the Realtor.com® economic research team.

At the other end of the spectrum, the share of outstanding loans with rates of 6% or higher ticked up just 0.1 percentage points compared to the fourth quarter of 2025, to 22.1%, reflecting slower growth momentum than last year.

Realtor.com senior economist Hannah Jones attributes this lull to a brief dip in mortgage rates below the 6% benchmark in February, before rates surged back up as war broke out between the U.S. and Iran, driving up oil prices and fueling inflation concerns.

“This means that well-qualified buyers likely secured mortgages below 6% in this period, contributing to a growing share of 5% to 6% mortgage holders and the leveling off of mortgages over 6%,” says Jones.

The rest of the rate distribution showed minimal movement between the fourth quarter of 2025 and the first quarter of 2026: the 5%-plus share edged up just 0.3 percentage point, while the 3% to 5% share retreated 0.3 percentage point quarter over quarter. 

The persistence of the lock-in effect

Tracking how fast sub-3% mortgages erode and how fast 6%-plus mortgages grow offers a clear indicator of the entrenched nature of the rate-lock bottleneck. It shows that existing homeowners remain reluctant to trade their historically low rates for today’s much higher market rates hovering around 6.5% just to move.

“These are borrowers sitting on rock-bottom COVID-era rates, with no natural payoff or move horizon in sight,” notes Jones.

Overall, 49.9% of all outstanding mortgages in the U.S. still carry rates of 4% or lower, and nearly 4 out of every 5 loans have a rate below 6%.

Still, the 6%-and-up share of mortgages has grown by 3.2 percentage points compared to the first quarter of 2025, representing meaningful year-over-year acceleration despite spiking borrowing costs and high prices. It signals that buyers are gradually adjusting to higher rates over the long term.

Chris Sbonek, president and CEO of Mitten Mortgage Lending in Michigan, tells Realtor.com that his firm is still seeing a significant volume of pre-approvals as people continue to purchase homes despite the rising rates.

“At the end of the day, people are driven by forces outside of their control to buy and sell, so there will always be some relief through natural life cycles,” Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage, tells Realtor.com.

“If you are a serious buyer, it does not make sense to try to game the market and let rates drive your decisions—just make sure the monthly payment is manageable and focus on finding the right property at the right price.”

Life events drive demand

Despite economic headwinds from the ongoing conflict in the Middle East, the 2026 homebuying season has been relatively strong, reflecting the housing market’s resilience, even as the average payment for existing mortgage holders hit a new record high of $2,023.

Going forward, inflation and mortgage rates will be key drivers of buyer and seller activity, and easing rates could help unlock additional inventory.

“When we see rates consistently in the mid- to low-5% [range], I think that anyone who has been hanging on to a great-rate first mortgage will be more open to giving it up,” says DeFlorio.

“We also have to consider that many people took adjustable-rate mortgages during the pandemic, so we will start seeing those 7- and 10-year mortgages reset in the next few years, sending people back into the market for a refinance or sale of the property.”

Sbonek agrees, arguing that homeowners currently sitting on historically low rates will come off the sidelines to either sell or refinance their properties to consolidate debt if the mortgage rates slide down into the 5% range and stay there for an extended time period.

“Some families have grown substantially since the era of low rates and will simply need to sell to buy something bigger,” he says. “Giving up a 3% rate for a 6%, 7%, or 8% rate is a tough pill to swallow. However, trading a 3% rate for a 5% rate seems much more attractive to borrowers.”

However, DeFlorio says she does not expect a massive rush to the market, but rather a “natural ebb and flow as rates work their way back down.”

With that in mind, Sbonek says inventory will remain steady in the near term, until sellers decide to shed the “handcuffs” of their pandemic-era low rates. This means that first-time buyers on a tight budget will have to wait a while longer for a chance to secure an affordable starter home.

“When rates were low, someone on a $30,000 annual salary could qualify to buy a starter house,” he says. “Taxes were also much lower due to the lower prices and resulting tax basis. Many of those houses have now doubled in value, resulting in severely increased taxes and a much higher income needed to qualify.”