'Locked In': Homeowners Seeking to Sell Are Trapped by Their Low Mortgage Rates

Father cooking breakfast for daughters in kitchen.
MoMo Productions/Getty Images.

More than 80% of homeowners who want to sell feel “locked in” by their lower mortgage rates. 

Key Takeaways

  • The vast majority of those looking to sell their home and buy another feel "locked in" by their lower mortgage rates.
  • More than half of those looking to sell within the next 12 months are waiting for mortgage rates to come down.
  • Rates fell slightly for the first time in two months last week, and as a result, mortgage applications increased by more than 5%.

That's what Realtor.com and HarrisX found in a recent survey, saying that would-be sellers are waiting to list their homes in hopes of locking in a cheaper mortgage rate on a new purchase. 

Some 56% of those who were planning to sell their homes within the next 12 months are waiting for rates to come down. Another 25% are still planning to sell soon for personal reasons. 

The pandemic brought on record-low rates for those looking to buy their first home, and those wanting to upgrade or refinance. In fact, from 2017 to 2022, Millennial homeownership skyrocketed and the generation added 7 million new homeowners over the last five years. 

“Unfortunately, this comes with a bit of a Catch-22, as homeowners who locked in a 30-year fixed rate in the 2-3% range don’t necessarily want to give that up in exchange for a rate in the 6-7% range," said Realtor Chief Economist Danielle Hale.

As of the third quarter of 2022, the most recent data available, 92.6% of homeowners were paying less than 6%, according to the Federal Housing Finance Agency.

Mortgage rates dropped last week, falling to 6.3% for the average 30-year fixed-rate loan, the lowest in the past two months, according to the Mortgage Bankers Association. As a result, mortgage applications rose by 5.3% as buyers hoped to take advantage of the potentially fleeting lower rates. 

High rates also play a significant role in the available housing inventory. Existing home sales still are picking up despite the uncertainty from sellers about what their new mortgage rate could be.

Sales of existing homes jumped 14.5% in February, according to the National Association of Realtors, representing the largest monthly percentage increase since July 2020. In late March, when the data was released, the U.S. had about 2.6 months of existing home inventory, down 10.3% from inventory in January. 

"Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines," said NAR Chief Economist Lawrence Yun. "Moreover, we're seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs."

High Equity in Homes

Despite concern over mortgage rates, sellers are still confident in what they could get for their home and the amount of equity they have in it. Among potential sellers, 85% are happy with the amount of equity in their homes. Nearly three-fourths estimate that they have more than $100,000 in home equity, while another 20% estimate that number to be over $300,000. 

Sellers have raised expectations for their home sale from the last time they were surveyed in August of 2022, according to Realtor. Even in the fluctuating market, 33% of potential sellers say they want to take advantage of market conditions and believe they can make a profit on their home sale. 

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. MarketWatch. "Mortgage rates drop to new record low as coronavirus cases climb."


  3. National Association of Realtors. "Existing-Home Sales Surged 14.5% in February, Ending 12-Month Streak of Declines."

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.