89% of US Homeowners With a Mortgage Have a Rate Below 6%

Redfin reported on Friday (1-12-24) that 88.5% of US homeowners with mortgages have an interest rate below 6%. That is actually down from a record high of 92.8% in mid-2022.

Redfin says this means more than 88.5% of all homeowners with mortgages have a rate below the current weekly rate of 6.66%, prompting many homeowners to stay put instead of selling and purchasing another home at a higher rate—a phenomenon dubbed the “lock-in effect.”

However, Redfin points out that for most people it is not realistic to stay put forever. The share of homeowners with a rate below 6% has fallen from its record high partly because some homeowners are opting to bite the bullet and give up their low rate in order to move. Many are selling because a major life event has given them no other choice, while others are putting their homes on the market because they want to live in a different house or city. Another reason the share has dipped: Everyone who purchased a home in the last year—repeat buyers and first-time buyers alike—was entering the market at a time when the average mortgage rate was above 6%.

For the purpose of the article, Redfin analyzed data from the 2023Q3 Federal Finance Housing Agency’s (FFHA) National Mortgage Database (the last period available). Redfin added the caveat that the share of homeowners with rates below 6% likely fell further in Q4 because of a dip in mortgage rates that drove more people to buy and sell homes, even as rates remained above 6%.

Here are Redfin’s Q3 findings:

• Below 6%: 88.5% of mortgaged homeowners have a rate below 6%, down from a record 92.8% in 2022Q2.
• Below 5%: 78.7% have a rate below 5%, down from a record 85.6% in 2022Q1.
• Below 4%: 59.4% have a rate below 4%, down from a record 65.3% in 2022Q1.
• Below 3%: 22.6% have a rate below 3%, down from a record 24.6% in 2022Q1.