Despite the still-challenging rate environment, some homeowners might opt to bite the bullet and give up their low rate to move, according to a Redfin study.   

Nationwide, the share of homeowners with relatively low rates has fallen modestly from a record high of 92.8% in mid-2022. In the third quarter of 2023, 88.5% of U.S. homeowners with mortgages had an interest rate below 6%.

To conduct this study, Redfin analyzed data from the Federal Housing Finance Agency’s National Mortgage Database as of the third quarter of 2023. 

Many homeowners choose to sell because of major life events, such as a marriage, a new child, a new job, or a divorce. Others simply want to move to a different house or city. Another reason explaining why the share of homeowners with relatively low rates has dipped is that some homeowners have a rate above 6%. For repeat buyers and first-time buyers who entered the market in 2022, the average mortgage rate was above 6%. As rates are currently declining, it makes sense for them to get a new mortgage.

The lock-in effect is still real but listings are starting to tick up

Declining mortgage rates appear to have helped the inventory situation somewhat. The 30-year fixed-rate mortgage averaged 6.66% as of Jan. 11, down from a peak of roughly 8% in October. 

“Sellers have started coming out of the woodwork because that’s typical for January and because mortgage rates have dropped,” David Palmer, a Redfin Premier real estate agent in Seattle, said in a statement. “They’re also coming to terms with the fact that rates aren’t going back down to 3% any time soon, which makes it easier to pull the trigger on selling. But a lot of sellers are worried about finding their next house because even though listings are rising, there’s still a housing shortage. That’s part of the reason so many sellers remain on the sidelines.”

Of course, there’s a group of homeowners who are sitting on enough equity to justify selling their home and taking a higher mortgage. As prices soared during the pandemic, many homeowners made a big profit on their purchase. Taking a new mortgage now can make even more sense if the homeowners wish to downsize or move to a more affordable area. As of the third quarter of 2023, 88.5% of mortgaged U.S. homeowners have a rate below 6%, 78.7% below 5%, 59.4% below 4%, and 22.6% below 3%.

Affordability remains an issue even if mortgage rates started to trend down



For the four weeks ending January 7, 2023, the monthly payment on a median-priced U.S. home with an average mortgage rate of 6.62% cost $2,399. While that figure is down $325 from the all-time high in 2022, it’s still up 7.4% from a year ago. Overall, both mortgage rates and home prices are higher than they were last year.

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