Below-3% Mortgages Hold at 19.5% in Q1 as Inflation Deepens Housing Lock-In
Updated
Updated · WOLF STREET · Jul 1
Below-3% Mortgages Hold at 19.5% in Q1 as Inflation Deepens Housing Lock-In
1 articles · Updated · WOLF STREET · Jul 1
Summary
19.5% of outstanding mortgages carried rates below 3% in Q1, unchanged from Q4 and ending the steady decline in ultra-low-rate loans since 2021.
4.2% CPI inflation in May helps explain the stall: homeowners are holding onto sub-3% loans because their borrowing cost is effectively below inflation, preserving an unusually favorable deal.
49.9% of all mortgages still carried rates below 4% in Q1, down just 20 basis points from Q4—the smallest quarterly drop since 2022 and the first dip below half since Q3 2020.
33.3% of mortgages now carry rates above 5%, including 22.1% above 6%, as newer borrowing reflects today’s much higher mortgage-rate environment.
That mix keeps the housing market frozen: owners with cheap existing loans are less willing to sell and reborrow at higher rates, restraining transactions across brokerage and lending.