"Homeowners who have a higher mortgage rate are less likely to hoard the property. Higher rates mean investments are less profitable. It means holding costs are higher and therefore the house is more likely to be re-sold. It also implies that homeowners who lose their jobs are more likely to need to sell or face delinquency and even foreclosure. Foreclosures have been ultra-low for many years."
"There are now 10 million or so Americans with expensive mortgages, up from basically zero three years ago. These borrowers are much more likely to get into trouble with their more expensive payments. We should expect the rate of distressed sales to increase in 2026. All of these characteristics imply greater turnover and more home sales. Every day there are fewer Americans locked-in to ultra-cheap mortgage payments."
After three years of high interest rates, the U.S. mortgage landscape has changed, creating a bifurcated market with about 20% of mortgages above 6% and 20% below 3%. Homeowners with higher mortgage rates face higher holding costs and weaker investment incentives, increasing the likelihood of resale, delinquency, or foreclosure following job loss. Approximately 10 million Americans now hold expensive mortgages, up from near zero three years ago, suggesting distressed sales will rise in 2026. Despite modest national price gains of roughly 1–2% year-over-year, overall loan-to-value for outstanding mortgages is 44.2% and about 40% of homeowners own homes free and clear, producing substantial aggregate home equity.
#mortgage-rate-bifurcation #distressed-sales-and-foreclosures #homeowner-equity #housing-market-turnover
Read at www.housingwire.com
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