"The U.S. housing market has officially crossed a financial Rubicon, creating a distinct caste system among American homeowners. For the first time since the Federal Reserve began its aggressive rate hikes years ago, the share of homeowners paying steep mortgage rates above 6% now exceeds the elite class of borrowers holding onto rock-bottom rates below 3%. This milestone, identified by Realtor.com's senior economic research analyst Hannah Jones on Jan. 14, marks a significant inflection point in the housing recovery."
"Membership in this club is exclusive to those who bought or refinanced during a specific historic window. Freddie Mac fixed rates for 30-year loans generally stayed below the 3% threshold only between July 2020 and September 2021-the only period in history dating back to 1971 when borrowing was that cheap. For these homeowners, the financial incentive to stay put is powerful; trading a sub-3% rate for today's market rate would increase the monthly payment on a median-priced home by nearly $1,000."
The share of homeowners paying mortgage rates above 6% now exceeds the share holding rates below 3%. Only 20% of outstanding mortgages carried sub-3% rates as of the third quarter of 2025. Rates between 3% and 5% account for 48.6% of mortgages, with 31.5% between 3% and 4% and 17.1% between 4% and 5%. Combined, roughly 69% of outstanding mortgages carry rates of 5% or lower. Freddie Mac 30-year fixed rates remained below 3% only from July 2020 through September 2021. Homeowners with sub-3% rates face monthly payment increases near $1,000 if they refinance into current market rates, producing a strong lock-in effect on housing inventory.
Read at Fortune
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