In Q4 2025, the average mortgage holder’s monthly payment exceeded $2,000 for the first time, according to new Realtor.com data. In September 2022, new homebuyers crossed that level, demonstrating how freshly obtained mortgages bear the entire burden of today’s increased rates and prices. Starting at 6.34% in early October and ending the year at 6.15%, mortgage rates decreased through Q4 of 2025.
They kept declining through February 2026 before experiencing a dramatic increase in March as a result of worries over the crisis in the Middle East. Rates have been above 6% since September 2022, with the exception of a week in late February 2026, keeping many potential sellers “locked in” and impeding the recovery of the entire inventory.
Housing data from March 2026 indicated some vitality heading into spring despite such obstacles: New listings up 21.2% from February, and pending sales increased 3.9% year-over-year (YoY), marking the third straight month of yearly growth. Even though active listings increased 8.1% YoY, they were still 13.8% below average pre-pandemic levels from 2017 to 2019. The new-home percentage of inventory is still higher than it was before the pandemic, and new-construction inventory has continued to close some of the gap. In supply-constrained regions, particularly in inexpensive neighborhoods where homes continue to sell rapidly and purchasers face competition, a lack of resale inventory has maintained upward pressure on home prices.
Mortgage Rates, Loans & Payment Activity
From 19.8% in Q3 and a peak of about 24.6% in early 2022, some 19.7% of outstanding mortgages had an interest rate below 3% in Q4 of 2025. In July 2020, the Freddie Mac fixed rate on a 30-year loan fell below 3%, and it remained below that level until September 2021. This was the only time in the data’s history (since 1971) that rates fell below this threshold, underscoring how exceptional these circumstances were.
The changes in rate share between the third and fourth quarters of 2025 were slight but consistent: While the 5%-to-6% and 6%-or-higher categories also increased, every bracket below 4% kept getting smaller. As 38% of outstanding mortgages, the largest proportion in the data’s history, fall within the 5-to-7-year loan age window—that is, loans that originated between 2018 and 2020—the sub-4% share decreased by a total of 0.4 percentage points, relaxing gradually. The 1-to-4-year cohort share in Q4 was surpassed by the early-COVID-19 refi cohort, which is firmly in the 5-to-7-year age range. These borrowers are not yet at a natural payment or move horizon because they locked in low rates from the COVID-19 timeframe.
The extremely slow erosion indicates how strong the lock-in is. Both “swappers,” or borrowers switching from a lower-rate mortgage to a higher-rate one, and buyers paying off their mortgages and becoming outright owners are captured by the sluggish change. Further, home builders are still providing rate buydowns and other incentives, which could be contributing to the stability of those shares and the 4%–6% range. In line with some buyers locking in on the lower end of the current rate environment, the 5%–6% bracket increased by 0.2 percentage points to 10.6%.
Approximately 78% of outstanding mortgages have a rate below 6%, and slightly more than half (50.6%) still have rates of 4% or less. The 6%-or-higher share is currently at 21.9%, up 3.9 percentage points from 18.0% in Q4 2024. This significant YoY acceleration is fueled by persistent buyer activity despite high financing prices.
Homeowner Trends & Buyer Activity
As buyer activity continued despite high rates, the percentage of homeowners with a mortgage with a rate of 6% or more rose by about 4 percentage points between Q4 2024 and Q4 2025. Homebuying activity around significant life events, like having children, changing jobs, or getting divorced, keeps the market moving even in today’s expensive, high-rate market. Seller activity will also be significantly influenced by declining mortgage rates and inflation, which will ease some of the pressure on prices and competition in the current undersupplied market.
Since the $2,005 average payment represents the whole portfolio, including the sizable group of pre-2022 borrowers who still have sub-4% interest rates, it is a floor rather than a limit on affordability pressure. Many potential sellers are trapped in place because new borrowers entering the market now must make payments that are significantly higher than what the current portfolio average suggests. Early in 2013, the average payment was $1,255. By the beginning of 2020, it had gradually increased to $1,456. However, as home prices skyrocketed and new originations with larger loan balances came in, the average payment quickly increased.
The largest increase occurred after mid-2022, when already high costs were exacerbated by the rate jump. From $1,390 in early 2021 to $2,005 today, the average payment increased by more than $600 in just three years—a 44% increase in around four years.
| Outstanding Mortgage Rate | Share of Mortgages (2025 Q4) | Cumulative Share |
| < 3% | 19.7% | 19.7% |
| 3% to 4% | 30.9% | 50.6% |
| 4% to 5% | 16.8% | 67.4% |
| 5% to 6% | 10.6% | 78.0% |
| 6% + | 21.9% | 100% |
The portfolio’s loan tenure distribution has drastically changed, which is one of the most notable structural changes in the Q4 2025 data. From 11.8% in Q4 2023 to 38.4% in Q4 2025, the percentage of outstanding mortgages with a loan age between five and seven years increased by 26.6 percentage points in just two years, surpassing the under-4-year bucket for the first time. This is the mechanical result of the wave of refinancing in 2020–2021, when many homeowners locked in rates of less than 3% and 4%, which are now aging into that window of five to seven years. Additionally, the market is skewed away from 1- to 4-year duration mortgages since fewer buyers have refinanced in the last four or more years.
Overall, the steady quarterly loss of the sub-4% cohort and the fast expansion of the 6%+ population imply that the market’s center of gravity is steadily shifting, even though almost 78% of outstanding mortgages still have rates below 6%, indicating that the rate lock-in remains significant. The concern for 2026 is whether relief will come quickly enough to free reluctant sellers before another spring season passes, which is currently exacerbated by increasing rate volatility linked to geopolitical uncertainties.
