Wild stat from Goldman: over 95% of mortgage holders are sitting on rates below today's market levels. Nearly two-thirds are locked in at least 2 full points cheaper.
This is the lock-in effect in action. Nobody's selling. Nobody's refinancing. The housing market stays frozen because moving means trading a 3% mortgage for a 7% one.
It's a textbook example of how rate cycles create real behavioral constraints — not just theoretical ones. People aren't being irrational by staying put. They're being perfectly rational. The math just doesn't work to move.
This dynamic keeps inventory tight, prices elevated, and first-time buyers squeezed. It also means the Fed's rate hikes hit the economy unevenly. Existing homeowners with locked rates? Barely feel it. New buyers? Crushed.
Worth remembering: financial conditions aren't uniform. The same policy rate creates completely different realities depending on where you sit in the system.
This is the lock-in effect in action. Nobody's selling. Nobody's refinancing. The housing market stays frozen because moving means trading a 3% mortgage for a 7% one.
It's a textbook example of how rate cycles create real behavioral constraints — not just theoretical ones. People aren't being irrational by staying put. They're being perfectly rational. The math just doesn't work to move.
This dynamic keeps inventory tight, prices elevated, and first-time buyers squeezed. It also means the Fed's rate hikes hit the economy unevenly. Existing homeowners with locked rates? Barely feel it. New buyers? Crushed.
Worth remembering: financial conditions aren't uniform. The same policy rate creates completely different realities depending on where you sit in the system.