Is the Mortgage “Lock-In” Effect Starting to Break?

Over the past few years, homeowners have been reluctant to move. The reason? Historically low mortgage rates.

Many homeowners locked in rates below 4%, making it difficult to justify taking on a new mortgage at today’s higher interest rates. This phenomenon has often been referred to as the “lock-in effect.” But recent data suggests that may slowly be starting to change.

According to recent housing data, approximately 20% of mortgage borrowers now have interest rates above 6%, which means they likely purchased or refinanced within the past year. That’s a noticeable shift compared to early 2025, when the majority of homeowners were still sitting comfortably in ultra-low rate loans.

While just over 50% of homeowners still have mortgages below 4%, that percentage has gradually been declining, especially over the past year.

At Radius Wealth Management, we closely monitor trends in the housing market because a home is often one of the largest financial assets a person owns. Decisions around buying, selling, or refinancing can have a meaningful impact on long-term financial planning.

What’s Changing?

For many homeowners, the decision to move has come down to simple math.

Even small interest rate changes may not move the needle as much as people expect. For example, if mortgage rates dropped 0.15% on a hypothetical 30-year fixed loan, the average homebuyer might save only around $35 per monthon a typical home purchase.

When you put that into perspective, that’s less than the cost of many monthly streaming subscriptions.

As a result, some homeowners may be reconsidering whether waiting for significantly lower rates is worth putting life plans on hold.

Looking at the Bigger Picture

While mortgage rates are certainly an important factor, they are only one piece of a much larger financial picture. Housing decisions should be evaluated alongside broader goals such as retirement planning, investment strategy, tax considerations, and lifestyle needs.

At Radius Wealth Management, we help clients think through these decisions in the context of their overall financial plan.

If you’re considering a move, refinancing, or simply wondering how your home fits into your long-term financial strategy, we’d welcome the opportunity to talk through your thoughts and help you evaluate the numbers.