03/20/2024
What is the “Lock-in effect”?
An unwillingness on the part of homeowners to trade in their lower-rate mortgages for higher ones.
Here’s where this trend stands today:
In Q3 2023, fewer Americans had mortgages below 6% than in 2022 due to moving. And what causes people to move regardless of interest rates? Major life events, including the 5 D's: diapers, diplomas, diamonds, divorce, & death
Between Q3 2022 and Q3 2023, more homeowners chose to move, accepting higher mortgage rates.
The lock-in effects still contributes to inventory shortages, but listings have started to rise due to slightly lower rates.
Homeowners with historically lower mortgage rates (between 3% and 4%) are more likely to “suffer” from the lock-in effect than those with rates between 5% and 6%.
Rather than focusing on the rate, I’m telling buyers to focus on the affordability of the monthly payment.
If you want to talk about buying this spring — and what it would take to get you in a home of your own, feel free to reach out anytime! I'd be happy to help you put a game plan together.
