COVID-era homeowners are still hanging on to their ultra-low-rate mortgages
COVID-era homeowners are still hanging on to their ultra-low-rate mortgages
Claire BostonWed, April 15, 2026 at 10:00 AM UTC
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It’s been four years since sub-4% mortgages were commonplace. But the homeowners who got them back then are determined to hold on to them today.
More than half of all outstanding mortgages still carried rates below 4% at the end of last year, according to Realtor.com, a testament to how few borrowers with rate deals are willing to move or pay off their homes early now that mortgage rates are far higher.
That reluctance to move and give up a below-market mortgage rate is known as the “lock-in effect,” and has profound effects on the housing market, contributing to three straight years of home sales near multi-decade lows. Few sellers mean prospective buyers have little inventory to choose from, and that low supply has driven up home prices.
“The COVID cohort is holding steady as their rates are too low and their equity too substantial to motivate a move, and new entrants are trickling in slowly,” the report said, adding that it would likely take a substantial drop in mortgage rates from today’s levels around 6.4% to “unlock meaningful seller activity.”
sign advertises low interest rates in a new housing development on April 7, 2026 in Valencia, California. (Mario Tama/Getty Images) (Mario Tama via Getty Images)
The share of homeowners with sub-4% rates peaked at 65% of the market in 2022. Years later, this number has only gradually trickled down thanks to locked-in homeowners and interest rate buy-downs offered as incentives to some buyers of new-construction homes.
Relatively small differences in mortgage rates can translate to big changes in monthly payments. The buyer who put 20% down on a $400,000 home would pay $1,528 in principal and interest monthly with a 4% mortgage. But at 6%, that monthly payment becomes $1,919.
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On average, a typical homeowner’s monthly payment crossed $2,000 for the first time last year, according to the report, a reflection of newer buyers who have taken higher rates. Just under 22% of mortgages have a rate above 6%. That share is up from 18% from the end of 2024 and now sits at the highest level in a decade.
In theory, rate-lock pressures should gradually ease as more homeowners need to move during life events, making mortgage rates north of 6% more common. But it’s not clear if that will happen this spring, especially because mortgage rates have risen in recent weeks in response to the Iran War.
“The question for 2026, now complicated by renewed rate volatility tied to geopolitical uncertainty, is whether relief arrives fast enough to unlock reluctant sellers before another spring season slips by,” the report said.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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