Purchase and refinance activity surged in 2020 and 2021 due to record-low mortgage rates and rising homebuyer demand. Consequently, during those two years alone, over 25% of all mortgages that have been outstanding since 1995 were either opened or refinanced. In other words, about one-fourth of existing mortgages are from 2020 or 2021 alone.
Both homebuying and refinancing plummeted as mortgage rates started to rise in 2022. Only 22.1% of outstanding mortgages were originated between 2022 and the most current data in August 2025, highlighting how drastically activity decreased after rates increased.
The entire cost of financing a house purchase soared dramatically as mortgage rates and home prices increased. Compared to purchasers originating loans today, current homeowners, many of whom are clinging to the extremely low rates obtained in 2020 and 2021, pay significantly less each month. The “lock-in effect” is based on this growing discrepancy between current and new payments.
Due to the fact that buying a new home in the same neighborhood would need taking out a far larger mortgage, homeowners nationwide found themselves unable or unable to sell. The idea that “I couldn’t afford to buy my home today” became more prevalent, which led to some of the lowest for-sale inventory on record and historically low mobility.
Lock-In Effects on U.S. Owners, Buyers Nationwide
While much of the nation has seen a sharp slowdown, the Midwest and Northeast’s affordable areas typically show the least lock-in effects, which has kept home sales activity relatively durable. The increase in monthly payments needed to purchase a typical home is significantly less than the national average, which lessens the financial penalty for moving, even though housing costs have increased in these markets as well. As home purchasers seek refuge in these low-cost metro areas, these inexpensive refuge markets have seen significant demand and comparatively robust sales activity in recent years.
Because home prices and mortgage balances are often lower in these areas, higher mortgage rates result in smaller absolute payment increases, making movement more practical for current homeowners. However, this is just one aspect of the situation. Due to a combination of a less severe COVID-19 pandemic sales boom, fewer refinances (partially because smaller loan balances decreased the incentive to refinance), and more consistent sales activity in the high-rate environment of 2022–2024, many of these metro areas also started the current cycle with higher average outstanding mortgage rates.
When taken as a whole, these factors indicate that a greater proportion of homeowners currently have mortgages at comparatively high rates, which lessens the financial cost of relocation. Consequently, compared to more locked-in markets, metro areas like Pittsburgh, Baltimore, Buffalo, NY, and Detroit have experienced more consistent market activity.
| Metro | Current Mortgage Holder Median Monthly Payment | Current Mortgage Holder Median Rate | Oct 2025 Est. Monthly Payment | Gap |
| USA | $1,291 | 4.0% | $2,236 | 73.2% |
| Pittsburgh | $995 | 4% | $1,318 | 32.5% |
| Baltimore-Columbia-Towson, MD | $1,505 | 3.9% | $2,016 | 34.0% |
| Buffalo-Cheektowaga, NY | $1,046 | 4.3% | $1,410 | 34.8% |
| Detroit-Warren-Dearborn, MI | $997 | 4.1% | $1,413 | 41.6% |
| San Antonio-New Braunfels, Texas | $1,209 | 4.3% | $1,734 | 43.4% |
| Urban Honolulu, Hawaii | $2,415 | 3.8% | $3,473 | 43.8% |
| Toledo, Ohio | $798 | 4.3% | $1,149 | 43.9% |
| Akron, Ohio | $874 | 4.3% | $1,263 | 44.5% |
| Birmingham, AL | $1,075 | 4.1% | $1,581 | 47.0% |
| Dayton-Kettering-Beavercreek, Ohio | $902 | 4.4% | $1,335 | 48.0% |
The distribution of outstanding mortgage rates is consistent with the concentration of the least locked-in markets in the Midwest and South. Currently, 80.3% of mortgages in the country have interest rates lower than 6%. That percentage drops to 77.7% in the South and 79.4% in the Midwest.
Since September 2022 was the first time since 2008 that mortgage rates surpassed 6%, most mortgages above this barrier had been issued within the previous three years. Since fewer homeowners in these areas are holding onto 3%–4% rates, these newer loans both lessen the severity of the lock-in effect and reflect a less locked-in owner base. In recent years, there has been less lock-in in these areas, which has allowed more households to relocate in spite of high mortgage rates.
Each relocation resets borrowers to the current, higher rates. Because of this, there are less financial consequences for homeowners in more reasonably priced locations when they relocate, which encourages consistent transaction activity and relatively healthier levels of inventory turnover.
As seen in San Antonio, Texas, falling property prices can also mitigate the lock-in impact. For almost two years, the cost of purchasing a home has decreased due to the annual decline in property prices. The difference between what current homeowners pay on their mortgages and what a prospective buyer would pay now has decreased, with prices now 14% below their mid-2022 peak.
High-priced coastal and rapidly expanding areas have been particularly hard hit by the rise in borrowing costs. Expected mortgage payments for a comparable home purchase have increased by more than 150% in metro areas including San Jose, Los Angeles, Portland, ME, and Oxnard, significantly deterring mobility.
The impact of rising rates is exacerbated because buyers in these areas usually rely on bigger mortgage balances due to the already high cost of properties. It is much more difficult for current homeowners to relocate within the same market or for prospective buyers to enter when even small rate hikes result in sharp increases in monthly payments.
| Metro | Current Mortgage Holder Median Monthly Payment | Current Mortgage Holder Median Rate | Oct 2025 Est. Monthly Payment | Gap |
| USA | $1,291 | 4.0% | $2,236 | 73.2% |
| San Jose-Sunnyvale-Santa Clara, CA | $2,604 | 3.8% | $7,281 | 179.6% |
| Los Angeles-Long Beach-Anaheim, CA | $2,096 | 3.8% | $5,792 | 176.4% |
| Portland-South Portland, ME | $1,297 | 4.0% | $3,305 | 154.8% |
| Oxnard-Thousand Oaks-Ventura, CA | $2,090 | 3.8% | $5,267 | 151.9% |
| Bridgeport-Stamford-Danbury, CT | $1,696 | 3.9% | $4,214 | 148.5% |
| Boise City, ID | $1,331 | 3.9% | $3,159 | 137.3% |
| San Diego-Chula Vista-Carlsbad, CA | $2,108 | 3.8% | $4,886 | 131.8% |
| Boston-Cambridge-Newton, MA-NH | $1,857 | 3.8% | $4,216 | 127.0% |
| Providence-Warwick, RI-MA | $1,372 | 3.8% | $3,070 | 123.8% |
| Salt Lake City-Murray, Utah | $1,393 | 3.9% | $3,054 | 119.2% |
Similarly, compared to 80.3% nationwide, 84.6% and 81.0% of outstanding mortgages in the West and Northeast, respectively, had interest rates below 6%. Home sales in these areas have declined more dramatically over the last three years, which can be explained by the high percentages of low-rate loans.
At the lowest rate levels, the lock-in impact is even more noticeable: nearly one in four mortgages in the West have a rate below 3%, whereas the national average is 20.4%. Since selling would frequently result in more than tripling their monthly housing payment, such clusters of ultra-low rates effectively keep homeowners in place.
Locked-in markets alter the whole housing environment in addition to slowing down home sales. Fewer homeowners decide to list their properties when a big percentage of them have mortgages that are far below current rates, which results in persistently low inventory, decreased mobility, and poorer turnover.
This restricts the possibilities available to first-time purchasers, maintains high prices in spite of declining demand, and slows the process by which households naturally gravitate toward properties that better suit their needs. Additionally, lock-in reduces labor mobility by making it more difficult for employees to move for work or family obligations. These pressures intensify in the most locked-in markets, exacerbating issues with affordability and prolonging the stagnation of the housing market.
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