Every year, our team sits down with our preferred title attorney to talk about the economic outlook for the coming year, specifically as it relates to the housing market. We always walk away with useful information to share with our clients, and this year was no different. But I'll be honest - we heard something this time around that really caught our attention.
According to the Mortgage Bankers Association, the number of homeowners in this country with a mortgage rate above 6% has now officially surpassed the number of homeowners with a rate below 3%. To put a number on it, roughly 21% of current US mortgages are above 6%, while about 20% are below 3%.
Why does this matter?
If you've been paying attention to the housing market over the past few years, you've probably heard the term "rate lock-in effect." Here's the short version: during COVID, mortgage rates dropped to their lowest levels in modern history. Everyone decided to buy a house, and most people who already owned one decided to refinance. The result? A massive number of homeowners locked in at or around 3%. When rates jumped up to 7%, those homeowners felt handcuffed. Why leave a 3% rate to buy a more expensive home at 7%? The math just didn't work, and it kept a huge number of buyers and sellers on the sidelines.
Now that time has passed and more homeowners are carrying rates above 6%, the psychology is shifting. People are starting to realize that a 6% rate is actually pretty darn good when you look at it historically. And that shift in perspective is opening things up. More buyers and sellers getting back in the game means more inventory and a deeper buyer pool, which is healthy for everybody.
As is always the case, nobody truly knows what tomorrow will bring. But we're seeing more and more evidence that makes us feel optimistic about market conditions for 2026. If you've been feeling handcuffed by mortgage rates but think this might be your year to make a move, give us a call and we'd be happy to walk you through it.
