What is the “Lock in effect”??
An unwillingness on the part of homeowners to trade in their lower-rate mortgages for higher ones.
Here’s where this trend stands today:
In Q3 2023, fewer Americans had mortgages below 6% than in 2022 due to moving. And what causes people to move regardless of interest rates? Major life events, including the 5 D’s: diapers, diplomas, diamonds, divorce, & death
• Between Q3 2022 and Q3 2023, more homeowners chose to move, accepting higher mortgage rates.
•The lock-in effects still contributes to inventory shortages, but listings have started to rise due to slightly lower rates (under the 8% peak of 2023).
• Homeowners with historically lower mortgage rates (between 3% and 4%) are more likely to “suffer from” the lock-in effect than those with rates between 5% and 6%.
Rather than focusing on the rate, I’m telling buyers to focus on the affordability of the monthly payment.
If you want to talk about buying this spring — and what it would take to get you in a home of your own, schedule a 15 minute discovery call with me. The link is in my bio – I’d love to connect.
Source: Is the Lock-In Effect Fading? How to Help Homeowners Navigate Today’s Interest Rates – BAM
Utah County Homes, The Bennetts 