Mortgage Rate Lock-In Still Dominates

Higher rates are slowing the release of pandemic-era low-rate mortgages and stretching the housing market's slow thaw

AUSTIN, Texas, Oct. 22, 2026 /PRNewswire/ -- Mortgage rate lock-in remains the dominant force in today's housing market as higher rates slow the gradual release of low-rate loans. In the second quarter, mortgages with rates of 5% or higher continued to grow, while recently originated loans continued to lose share, according to Realtor.com^®'s Q2 2026 Outstanding Mortgage Data report.

Just 27.8% of outstanding mortgages originated since mid-2022, when mortgage rates started rising after their pandemic lows. Meanwhile, loans originated from mid-2019 to mid-2022, when rates reached historic lows, now account for a record 42.8% of the market. Many homeowners in this pandemic-era group either bought or refinanced at exceptionally low rates, making a move harder to justify when a new mortgage would cost more.

"A mortgage rate below 3% was an extraordinary exception, not a new normal. In data going back to 1971, rates fell below that mark only during the pandemic-era window and homeowners are still making decisions around those unusually low rates today," said Hannah Jones, senior economist at Realtor.com^®. "The rate unlock is real, but it's slow, as low-rate loans gradually age out, are traded up or paid off."

Source: FHFA National Mortgage Database

If mortgage rates remain above 6%, the share of outstanding loans with rates of 6% or higher could reach 27% to 28.5% by mid-2027, its highest level in more than a decade.

"Even in today's high-price, high-rate market, homebuying activity around major life events, such as having kids, a job change, or a divorce, keeps the market in motion. Easing inflation and lower mortgage rates should also bring more sellers off the sidelines, adding inventory which relieves price pressure and competition in today's under-supplied market. However, the recent surge in mortgage rates has pushed expectations of recovery further afield," Jones said.

The pandemic-era refinancing wave is aging into lock-in

The 2020–2021 refinancing wave is now reshaping the age of outstanding mortgages. The 5-to-7-year loan group grew from 40.8% last quarter to a record 42.8% in Q2 as pandemic-era buyers and refinancers hold on to their loans, overtaking the newer-loan group that historically made up the largest share. Many homeowners in this cohort locked in exceptionally low rates and have no natural payoff or move horizon in sight.

Mortgages less than four years old have fallen from roughly six in 10 in 2023 to fewer than three in 10. As fewer new loans enter the market, the gradual decline in low-rate mortgages largely reflects owners trading up to a higher rate or paying off a loan—not a broad thaw in housing activity.

What Could the Outstanding Mortgage Landscape Look Like a Year from Now?

We expect mortgage rates to remain elevated over the next year, which means the vast majority of mortgage originations will fall into the 6%-plus bucket. We consider two paths for new mortgages at 6% or higher: they either replace existing lower-rate loans, keeping the total number of mortgages roughly flat, or add to the total without paying off older loans. In both cases, the higher-rate share grows, landing somewhere between 27% and 28.5%, and lower-rate loans lose share. The difference is whether lower-rate loans decline in number or become a smaller portion of a larger pool; the actual outcome is likely to fall between these scenarios.

Methodology

Data: FHFA National Mortgage Database (NMDB), a 1-in-20 sample of first-lien mortgages. Shares are by loan count. Rate buckets reflect the rate at origination. Loan age is time since origination, so refinanced loans are dated to the refinance.

Starting point: The latest quarter is a first print and is typically revised up by about 1% as late-reported loans arrive, mostly in the 5% to 5.99% and 6%+ buckets. We adjust Q2 2026 accordingly for the forecasted loan shares.

New loans: 3.1M over the next year, matching 2025 home purchase originations in the FHFA data. All are originated at 6% or higher, and we assume no refinances.

Scenarios: In the net-new case, no existing mortgages pay off. In the replacement case, each new loan pays off a sub-6% mortgage, drawn proportionally from those buckets. Most existing 6%+ loans are assumed to stay outstanding.

About Realtor.com^®
For over 30 years, Realtor.com^® has connected buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 real estate site REALTOR® agents recommend, Realtor.com® delivers consumer connections and a robust suite of marketing tools to support business growth. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.

Media Contact: Mallory Micetich, [email protected]

SOURCE Realtor.com