A new Realtor.com report revealed that the percentage of homeowners with mortgages above 6% surpassed those with rates below 3% in the second half of 2025, indicating a reversal of the dreaded “lock-in effect.”
According to Realtor.com’s most recent data on outstanding debt, 20% of mortgages had interest rates below 3% in Q3 of 2025, down from 20.4% in Q2. In the meantime, the percentage of borrowers having interest rates greater than 6% increased from 19.7% to 21.2% on a quarterly basis.
Realtor.com The majority of the changes in the mortgage share between the second and third quarters, according to Senior Economic Research Analyst Hannah Jones, took place in the below-4% ranges.
“This may reflect ‘swappers,’ or borrowers exchanging a lower-rate mortgage for a higher-rate one,” Jones said. “The shrinking share of low-rate mortgages could also reflect buyers paying off their mortgages and owning outright.”
Measuring Mortgage Trends & More
Less than one-third of existing mortgages (31.5%), down from 32.1% in Q2, have interest rates between 3% and 4%, according to the most recent examination of federal mortgage data. Another 17.1% decline in the 4%–5% band, representing a 0.8 percentage point drop from the previous quarter. Furthermore, up from 9.9% in the prior quarter, 10.2% are between 5% and 6%.
“It’s definitely an important milestone towards a more normalized market,” Sarah DeFlorio, VP of Mortgage Banking at William Raveis Mortgage,” tells Realtor.com. “At the end of the day, this shift is driven by normal life events such as starting or growing a family, divorce, and death. Another important driver is a change in employment, whether through job changes and moving to a different geographic region or a return-to-office requirement.”
The percentage of mortgages in the 4%–6% range may be rising as a result of an increasing number of builders providing rate buydowns and other incentives.
“Something big just happened in the U.S. Housing Market,” real estate investor and Reventure app CEO Nick Gerli wrote in a recent X post, arguing that the diminishing share of sub-3% rate mortgage holders means “the dreaded Mortgage Rate “Lock-In” Effect is fading.”
Interest rates fell to all-time lows below 3% during the height of the COVID-19 pandemic in 2020, which led to an influx of new homebuyers. However, the respite was fleeting, and by 2023, the interest rate on a 30-year mortgage had risen to 7%, severely hurting affordability.
Many residents felt “locked-in” by their extremely low rates from a previous COVID era, even though the rates have since decreased and settled near the low-6% range by the end of 2025 and early 2026.
Selling in a market where the average rate on 30-year fixed home loans is 6.16% frequently requires such owners to give up a 3% mortgage and take on a new one at more than twice the rate; the average buyer of a median-priced home would have to spend close to $1,000 a month. However, as of the third quarter, over 6% of current owners already had mortgages. Gerli says such change encourages more owners to sell immediately.
According to the investor, the primary cause of the increase in the percentage of borrowers with over-6% rates—which has reached a level not seen since 2015—is that, despite the current difficult circumstances, 5 to 6 million Americans take out new mortgages at high rates every year.
There might be another important aspect at work here, according to Jones.
“Some households that had delayed moving in anticipation of lower rates may have decided to act as mortgage rates softened, making the timing feel more favorable despite still-elevated borrowing costs,” Jones said.
According to DeFlorio, a sizable group of homeowners who chose adjustable-rate mortgages during the epidemic will soon have their fixed-rate terms expire, which might release a sizable portion of “locked-up” inventory.
The End of the “Lock-In Effect”?
Rate lock-in is still significant, as seen by the most recent data analysis, which shows that about 80% of existing mortgages still have rates below 6%.
Nonetheless, the declining percentage of outstanding loans under 3% and the rising percentage of mortgages exceeding 6% indicate that the “lock-in effect” is gradually losing its hold on the housing market.
“This shift marks a meaningful inflection point, suggesting increased market movement as more households either trade in low-rate mortgages for higher-rate loans or enter the market for the first time,” Jones said.
The number of homeowners with a mortgage rate of 6% or higher rose by more than 4 percentage points between the third quarter of 2024 and the third quarter of 2025 as a result of properties continuing to sell despite high rates as people got married, had children, changed employment, or divorced.
A recent survey revealed that 40% of prospective purchasers would find a home purchase realistic if mortgage rates went below 6%, and 32% of them would be eager to embrace homeownership if rates dropped below 5%, despite the fact that the “lock-in effect” is still a significant factor.
In light of the continuous home-buying activity, Realtor.com experts predict that the Q4 2025 statistics may reveal a decline in the percentage of mortgages below 6% to nearly 75% as the percentage of mortgages with rates above 6% continues to rise.
“This has certainly been welcome news to many in the industry, with the implication of more listings creating downward pressure on pricing, which, coupled with lower rates, should create more buying opportunities as we head into 2026,” DeFlorio said. “I don’t know that it’s going to be enough to move the needle for many first-time homebuyers struggling with the high-cost barrier to entering the market, but hopefully, as we move through the next few years and rates continue to come down, affordability for these buyers will improve.”
The post Mortgage Swappers Impacting Nationwide Lock-In Effect first appeared on The MortgagePoint.
