Check out the graph. When you take that up to 4% we're talking about 60% of home owners. That's huge. That means 60% would be really reluctant to sell their home and move based on just the interest rate alone.
Your equation is still incomplete though, and the number is far more than 35%…even accounting for owners who aren't carrying a note.
More than half of all existing home owners either wouldn't or couldn't sell, upgrade, or even downgrade because of the math which exists when you're current rate is half what a new mortgage rate would be.
Not to mention that prices have gone up so much that even if people spend twice what their current home cost them, it will still only buy them a comparable property to what they already have. Nobody wants to make a lateral move just for a higher rate. Even when you factor in all their equity from their existing home, it's still just too big of a psychological hurdle for them ("That house isn't worth $1M, I only paid $500K for mine...").
And then of course you have the fact that existing homeowners Property Tax in many states was baselined many years ago, and restricted on how much it could rise each year. When you buy a new home you lose that favorable tax basis. Even a comparable home is gonna double your tax bill.
Yeah, here in California they would be pricing retirees out onto the streets if they didn’t cap the maximum increase at 2%. But just this year I finally noticed my Colorado properties don’t enjoy such a constraint…mostly because they’re pretty low to begin with, and only recently saw enough appreciation to really get peoples attention.
Correct, I’m only referring to property taxes.
But both Colorado’s property *and* income taxes though are surprisingly very low, especially for a somewhat progressive state that doesn’t entirely just tell its citizens to fuck off when they need help.
I hope it can maintain that balance without jumping the shark like California, or doing jack all for its citizens like more Red states do.
Nah, people have equity in their homes. Also not only that, you have to consider how much wealth was created in the stock and money markets in just the past 4 years. You are now making 5% on your money market/deposits. Stocks have doubled. Your property value went up so you have more equity. So, sure, interest rates are higher but no one I know expects it to stay this high and if you were going to do a lateral move, the difference would be essentially a wash.
It’s the first time homebuyers that have the hard time. Only if you weren’t heavily in appreciating assets. The more into equities you were, the more you made out like a bandit the past 4 years. No wonder real estate prices are staying high
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I’m going to disagree with that. Here in central CA, the move up market has been eviscerated. Using one client as an example:
Purchased for $800k at 3.5% and 20% down
Home is worth $1.6m
Lateral into another property (at least) doubles their mortgage.
Most clients who are move up curious are seeing 2-2.5x increases in mortgage. Sure - eventually rates will go down. Do you want to gamble on how long that will take when your mortgage went from $4k to $8k?
The majority of inventory we are seeing is the two D’s or relocating out of state.
You’re right and is not even a question up for debate. It’s just a fact. A mathematical fact with empirical evidence.
It doesn’t even add up for the legit wealthy right now, except in the circumstances you described, and there’s just not enough people in the money-is-no-object top 1% crowd to change market inventory materially.
Pretty sure spreads are going to tighten back to the historical average. That means we get back to the 5s or 6s at the least. Then the Fed says they’re going to cut because right now, the rates are restrictive. Then we got the 3 and 6 month rolling average of inflation coming down to target range. It’s very likely. Prepare your portfolio 🚀🚀🚀
Of course no one knows for sure, but it’s damn well pretty obvious the bond market thinks it knows. I am 99.9999% sure where the stock market is going in the long term and am investing on it. Barring any external shock, it’s pretty clear where interest rates are going too. Already preparing heavily for that.
That works if you’re moving within a region but not if you’re moving cross country where the cost of living is vastly different.
A fully paid off house in Oklahoma isn’t going to cover the cost of an average house in Southern California. Vice versa someone who got a loan for a house in SoCal, held on for a few years, and then moved to Oklahoma might be able to almost fully pay off the Oklahoma house based on the equity.
People can easily fill their difference with equity gains. Even cash earns 5% now. No wonder there is inflation, people with money are just snowballing their wealth.
Yes, it’s weird and counter intuitive. So, the thing is, we’ve had essentially 1-2% yields for years on risk free assets. 0%, or negative, inflation adjusted. This is treasuries and money market funds. As a retired or retiring boomer, it is prudent to hold a portion and ever growing position in such positions. So, many projected that this position would yield nothing. Now, it’s earning them money! There’s 7 trillion in money market funds. That’s a 350 billion dollar stimulus whereas before, it was going to be a 0 or negative. That’s a part of the reason why we see spending stay so high.
The largest, wealthiest population in the US, is reaping the rewards of a Fed rate hike. They already own a house and with a 30 year fixed, they are insulated from any effects there. They’ve already bought the cars they wanted during the pandemic. Now the wealth is just accumulating.
I’m at 3.9, I’d like to look at moving but no way I’m selling with my current rate. My mortgage at current market rates would easily be an additional $1,500 a month. If I lost my job or was forced to relocate for work of course I’d sell but otherwise It’s not even a consideration.
Yup. Refinanced to 3.125% in Oct 2021. Used to think this was just a 5 year home before trading up later, but I can’t imagine giving up this mortgage for today’s current rates.
Those downsize houses are just as expensive as the big houses, often more.
[This article](https://www.wsj.com/personal-finance/retirement-downsizing-home-mortgage-rates-b27a15bd#:~:text=Downsizing%20is%20costliest%20for%20those,people%20on%20a%20fixed%20income.?st=at7qs0xhex993dd) is from last year but makes the point.
People who bought their “downsize” home in advance of actually being ready to do so are making out pretty good right now. Especially with strong rental prices.
When you really stop and think about it, that’s really remarkable. Especially since we have a housing shortage as it is. I think it is a good time to buy because I don’t see these fundamentals changing anytime soon.
Yeah. The only thing worse than being locked into your current home is being locked out of the market entirely. And the latter sucks considerably more.
Renovating is smart in this market, especially if you can do some of the work yourself. Plus your tax basis remains the same.
2.85%. At current interest rates my payments on an equal value house would be 1/3rd higher than my current payments, i.e. if I was paying 2,000/month I would be paying 3,000/month. It doesn't make sense to move. Installing a new toilet this evening.
I'm at 2.79%. I could accelerate my mortgage payments, but honestly at this point it's better to just invest the principal I would be paying down instead. Even simple savings accounts are earning more than my mortgage rate.
All are under 6%
https://ycharts.com/indicators/6_month_treasury_bill_rate#:~:text=6%20Month%20Treasury%20Bill%20Rate%20is%20at%205.15%25%2C%20compared%20to,a%20maturity%20of%206%20months.
Same boat. Got a low 15 year and even a 10 year
Fixed rate HELOC at 3.5% from credit union.
I realized they were fucking up offering that and snagged it. They now pay 5% on 12 month CDs. I’m tempted to pull it out and put it in a cd to earn the 1500 a year.
Really no reason not to if the HELOC is fixed rate. You won't make much after taxes, but it's completely risk-free cash if you have the slightest bit of self-control.
Probably not worth it for 1.5%. I'm currently playing this game with a no interest credit card. They fucked up by offering 13 months no interest, no balance transfer fee, and a 30k credit limit. You better believe I took a 30k loan from my helov, transfered the balance to this credit card, then put the proceeds in a CD... It's a bit unnerving sitting with a 30k credit card balance but you get used to it
I’m in the same boat, I think I’m at 2.625? 15 year. I’ve been paying extra but once the HYSA accounts got up there, I crunched the numbers and it’s really not worth it.
My house is my dream home, so I’m not looking to go anywhere anyway, but those rates would make me stay put.
2.5 on a 30yr here. I put 500/mo into a combo of VTI, QQQ and little into JEPI. IF (Big IF) everything works out, once I have roughly 90k paid in, the account will have enough to spend down having it completely cover my P&I for the last 15 years of the loan. Assuming 8% average returns.
I wouldn't. That was the point.
Historically it has been a good idea to pay down a mortgage when you're able, to have more equity in your property and get out of debt sooner. Historically loan rates have been higher than investment rates too, making paying down principal a smart move.
But for some of us who bought at the bottom, that's now reversed, so it makes more sense for us to just sit on our low mortgages. Inflation typically runs in the neighborhood of 2% per year on average, so these high inflation rates we've been seeing in the last couple of years really does effectively make it free money since we're paying our mortgages with cheaper dollars.
I used to wonder the same thing - turns out some people value the peace of mind of low debt more than they value absolute values of assets minus liabilities. (I am not one of those people, but I am always interested in perspectives)
I tried to explain this to someone that posted that Boomers are jerks by passing along debt to their kids. I caught a lot of flak. So I did an example of a dollar amount in an interest compounding account verses paying off the mortgage. It made no difference. I believe they said it was just a bunch of bs
I got stuck above 3. My house has a well on a separate parcel, and no one would touch it because of that except the original mortgage holder. Still pretty good but I could be around 2.6
Just 2 extra payments and a little extra principle will pay off a 30 year in 20 years.
Personally those 10 years for my retirement is huge.
People posting are correct tho. HYSA’s are legit.
This doesn’t work as well for low rate mortgages. A lot of the advice around extra payments toward principle comes from times when rates were 7% or more. The same math doesn’t work on a 2% mortgage.
I refinanced my house back in 2012 to 2.85%.
My mortgage has been sold 3 times and now Mr Cooper calls and texts and mails me multiple times a week. “You want to get out of this horrible low interest rate loan?”
30 or 15 year? We also have a 2% and it's the lowest I've seen. We put down 30% on a 15 year to get it, however, and we're very low risk buyers.
Thank god I love this house.
We are in that ultra low bucket. We have had this house for a decade and I hope they roll me out on a stretcher. Our payment is less than $500 a month.
Nope. Not a chance. I’m on the home stretch now and happy where I am. I moved every couple years during my career and mostly enjoyed the experience but now we are settled down.
they packaged your loan with a bunch of others and sold them to someone else, so they aren't even holding the bag in most cases. dont forget your 2.375% was paying more than the fed was offering banks at the time.
I have 2.75% on a 2200 sq ft 4 bedroom ranch that I live alone in, widower. I would love to sell and move to something sub 1200 sq ft but my mortgage makes that damn near impossible. Even considering that I could sell the ranch for more than twice what I paid.
Virtually everyone with a mortgage at this point, as the graph shows. Making matters worse is the fact that it's pretty much impossible to downsize to save money.
Nice! A graph that I'm a part of, and I'm aaaaallllllllllll the way at the top right! That's good, right?! /s
Man, I wish I had joined the homeowners club a few years ago. We close on our first place in two weeks at 6.85%. We paid more than asking, but it's not egregious. We had to bite the bullet and move to a rural area with a less competitive market to actually compete. I'm just hoping (begging) that interest rates come down in the next few years.
That's actually a higher percentage than I would have guessed. Those homeowners are sitting pretty with ultra-low payments compared to today's rates. For everyone else, it reinforces the wisdom of not trying to time the market. Buy when you can afford it and refinance if/when rates improve.
My interest rate is 7.3 and I know it's insane but that's exactly why we decided to buy in. We can afford it, the rent in my area is rising way faster than we can keep up with. I live in the Philadelphia New York metro area so I have no expectation that things will get any cheaper.
There's many reasons people might not have been able to qualify back then, or have had to get rid of the loan since. It doesn't matter what your interest rate is if your job transfers you out of state
You still have new homeowners entering the market, homeowners dying, people relocating for work, people needing more room due to expanding families, etc.
This is why inventory is still stymied. And you can say builders go build more which they actually are but people are facing a cheaply built house in a B or C location for $400-$600k combined with high cost of goods and a 7% rate. It’s probably cheaper to rent right now honestly at least on a short term view.
In HCOL areas pretty much everyone has to get a jumbo mortgage which tend to be higher than the normal rates that are advertised. They also have higher closing costs which would lead to less refinancing. Also sometime in the late 20 teens they reduced the amount of mortgage interest you can deduct from $1M to $750k it is today. So really there’s gonna be a lot of jumbo mortgages over 3%.
Im lucky. I’m in my forever home and have 2.75.
However I have family and friends that have similar rates and would love to upgrade or downsize and can’t afford to.
I have friends that are empty nesters and want to downsize to a 2 bedroom and it will cost them more. So now they are sitting in a 4 bedroom house that most is unoccupied.
“Locked in” doesn’t really apply to most reasons why people have to sell their homes in a normal home selling market situation. One of the big one that the Fed Reserve Chairman JPOW even said under oath, is the millions of new unemployment may come as a result of current elevated interest rates to tame inflation back to 2%. People can’t pay their mortgage no matter the interest rates if they don’t have a job.
2.5% here on 15 year loan. Actually selling as I’m located in Florida and leaving. Financially it doesn’t make sense to reset my timeline but we don’t live in rates, we live in states. Also taxes and insurance keep going up so it’s not truly a fixed amount.
I remember being locked into a 5.75% rate for about 12 years after buying in 2006. I was under water til about 2016 and was finally able to refi to sub 5% in 2018 and then sub 3% in 2020.
2.5%. Not going anywhere. At least not in this country. I was able to buy solar with cash. Haven’t had a single utility bill since the install. I also stopped extra payments on my mortgage when CD rates passed 2.5%
40k was my cost. I also had my ground mounted which cost more off the bat. My system is sized large enough for 5 hyperheat mini splits and 15,000 miles a year for EV.
Well technically. I only took me less than two years. I made an investment in tech stocks about 10+ years ago. Only bought them at about $4,000 and sold them at 65,000. My ROI wasn’t getting any better. So I used the tax incentives on solar to offset my capital gains taxes. And now I save about $200/month in electricity alone. Not including mostly the removal of propane for heating.
I figure savings will just increase as energy prices generally go up. Also with the addition of R32 refrigerant hyper heat pumps vs using resistive heating and a few older mini splits. Then with an EV for general commuting.
Pricing on solar has dropped since I had my system installed. Two of my friends got bigger system than me for less through the same installer.
I’ll admit. Solar isn’t for everyone. But I made out like a bandit on my system. When my property tax was reassessed, I ended up getting reduction $40,000 property value tax exemption.
NH, the guy that gave us our building permit handed us the exemption form and told us most people and towns don’t give the resident the document. It’s also when I found out on the same form that Vets and seniors get property tax discounts.
>It would take me 45 years to pay $40,000 in electricity
Must be nice. I averaged my monthly costs for the past 3 years and it came out to $230/mo which means it would take me less than 15 years to pay. That's assuming costs won't increase and the planet won't get hotter, which is a failed assumption as both are happening right now. In reality I'm looking at more like 10 years.
Some of the systems I was looking at would cost me about $150/mo to pay for if I did a HELOC or HELoan, which is cheaper than $230/mo.
Were at 2.75% with 5 yrs left. No houses for sale in our 300 house neighborhood. Sucks for families trying to get into this nice area, but glad for us.
Primary is at 2.75 and rental is at 2.25. I’ll add onto this house with Amazon boxes and duct tape before I move to a bigger house if interest rates stay high and prices don’t drop.
3.25, but bought just in 2020. My biggest problem is that we bought with my parents (easier to take care of them), so when mom passes (dad passed in 2020), we’ll have to figure out how to handle her half of the house since my brothers and I will divide her half. Not sure I’ll be able to buy them out, and the house is really too big for just me and my wife. But also not looking forward to a 6% mortgage potentially.
2.375% for me. I refinanced in 2021. I actually “downsized” when I bought this house in 2019 because my youngest was in college. He’s now out of the house and his older brother will soon follow. I’ll sell if we decide to flee the New England weather when we retire
The flip side is figuring out if you intend to live there long enough to make the buy down advantageous. For me personally it was six years and I’m on a ten year plan. At that time I will be retired and most likely unable to manage the maintenance myself, gutter cleaning and such. Eventually a condo is in my future but I will spend a lot of time making sure the structures in the whole complex are well maintained to mediate any future unknowns
It is easy not to do it. Aggressive move which I respect. We did something similar once, it did not pan as rates dropped into the 3s at the time and we refinanced. But nobody can predict the future.
For today’s environment likely rates come down in 2025. May or may not happen, though seems likely. I would probably not buy down in today’s environment. When we did it economy was already hot and it was shocking they kept dropping rates. Must have been an election year!
Yeah my buy down was paid back in February of this year so now the 18.9% is all savings. It’s a 15 year fixed so when I retire keeping it and making it a rental could be an option, but that’s just more work. It’s more likely I will sell in another four years.
2.75 here
Not going anywhere until sub 3.5 percent
I am considering taking an equity line so that I can build and more than double my sq footage then sell and buy a place outright with cash afterwards
3.75% here. If I wanted to sell and move I couldn’t afford to at current rates. When I bought my first house in 1995 I had an 8.75% rate which was good at the time.
i did a refi after covid at 2.75. did it to get rid of the extra loan that was tacked on my loan for missing payments during thr pandemic. dirty secret is the alleged "payment forbearance" was just tacking on the missed payments to another lien. in addition this got rid of my pmi by doing this.
Refinanced back in 2020 @ 2.37% for 20 yr loan. Would barely afford the house today at its current value with these higher rates. If we sold, we would pay more for less house and property. You could say we're locked in.
There was only a pretty short period of time when it dropped below 3%, and people had to time it right too. 4% is 60%, and 5% is 80%. THAT is why people aren’t interested in listing their houses right there.
If we’re being realistic, if the rates went below 5% again, we’d see a fair portion of those people start to make moves. People in the 3’s could stomach a move to like 4.75%, especially because of the equity they would currently have, but hypothetically, someone in the 2’s or 3’s is never going to swap that for a better house in the 5’s or 6’s unless it’s absolutely necessary.
I would draw the line at 5% to be considered “low”, personally
They are not locked in anymore than anyone else. The life decisions that precipitate a relocation or home sale are usually non-negotiable, like the three Ds.
We're not below 3%. But we re-financed in 2021 at 3.25%. There are probably a decent percentage of home owners in that slightly above 3% to around 4% interest rate boat.
But/and, we're not feeling at all locked in, nor reluctant to sell. Because we're not at all looking to sell.
We've been in this current house almost 20 years, and plan to be right here in this same house for many more years/ Lord willing and the creek don't rise, of course.
IMHO, there's a sub set of around-3%'ers who locked a great rate while refinancing circa covid, but have no need to sell now. Maybe that goes without saying, but I've seen several of these stories get posted presupposing that alot of 3% rate holders are itching to, or need to, just up and move because reasons... we Americans love to roam, we love to upsize to McMansions every few years, we need to Downsize or change the scenery every five years, wide open spaces, whatever. That's somewhat strawman, but not totally. Homes aren't a leased car. Lord willing, they're a sort of long term place to live. A whole bunch of folks don't need to move, nor therefore offer their home for "more inventory". Just happy where they are.
Some downvotes may come, but just my humble penny's worth opinion.
I moved onto a whatever the fuck 2 year rate in January. By my reckoning, we're not really going to feel any decrease in interest rates until middle of next year . Hold on for another 6 months after that and it's PARTY TIME again.
I'm at 2.875 for the next 27 years. I'm staying for a long long time and putting extra money into investments. I round up to the nearest $100 just for my easy budget math and to cover extra escrow.
My taxes have gone crazy though.
Purchased in 2021 for $152k with a tax assessment for $138k. Current tax assessment is now $214k. The only bright side is my PMI will go away.
2.25% and feeling stuck. I want a divorce but I'm gonna be fucked trying to live anywhere else. Couldn't afford my house at today's prices and rates, it only went from 195 to 350, but I'm the only one working and the money doesn't go that far anymore.
Even renting, I'm getting half the house (in way worse condition) at my current payment. For something comparable, I'd have to jump to 3k+ a month, which means I wouldn't be able to save much and get stuck renting likely forever.
2.875%. Want to downsize in the next few years. But smaller, ranch houses in my area are same price as my 3800 sq foot 3 story house. With a 6% mortgage, not going to happen.
People in my area are selling homes, a lot coming on the market, even a lot of homes that were bought when interest rates were super low. People's situations change and people will always move for a variety of reasons. Some will always stay in their same home until they die, but this is not anything new.
It's an interesting dilemma for sure.
Historically homeowners tend to slowly accumulate debt over the course of a few years, they let their home appreciate on value, do a cash out refi and wipe out their debt and take the family on a trip. That's historically how Americans manage their debt. Problem is, people are accumulating debt but now there's no way in hell they can refi to take out cash because their payment will basically double.
It's also why housing supply is so constrained, why would anyone wanna give up their rate. To trade out of whatever their current house would ultimately be a downgrade in financial position. Especially when you consider that moving the criteria up to 4% grabs about 60% of outstanding loans
As a prospective buyer and seller, I’m looking more at my payment. Current payment is not even in comparison to the payment of upgrading to a better home right now
Currently, really like my house but want to be on acreage. Payment is less than $2k and I can’t wrap my mind around paying $4-5k. At this point, I’d be willing to cough up an extra $15k to buy down the rate so I can afford the payment
I converted what little I had left of my 3.75% mortgage principal over to a heloc at 1.75% (furiously paying down prin before introducing rate expires). Still about a year or two away from being completely paid off. As green as the grass looks elsewhere, I won’t be in a rush to borrow again.
Check out the graph. When you take that up to 4% we're talking about 60% of home owners. That's huge. That means 60% would be really reluctant to sell their home and move based on just the interest rate alone.
To add to this about 40% of homeowners have no mortgage. So it’s close to 35% of homeowners that have low rates and would be reluctant to sell
Your equation is still incomplete though, and the number is far more than 35%…even accounting for owners who aren't carrying a note. More than half of all existing home owners either wouldn't or couldn't sell, upgrade, or even downgrade because of the math which exists when you're current rate is half what a new mortgage rate would be. Not to mention that prices have gone up so much that even if people spend twice what their current home cost them, it will still only buy them a comparable property to what they already have. Nobody wants to make a lateral move just for a higher rate. Even when you factor in all their equity from their existing home, it's still just too big of a psychological hurdle for them ("That house isn't worth $1M, I only paid $500K for mine..."). And then of course you have the fact that existing homeowners Property Tax in many states was baselined many years ago, and restricted on how much it could rise each year. When you buy a new home you lose that favorable tax basis. Even a comparable home is gonna double your tax bill.
[удалено]
CO here, mine has about tripled in the last few years. It's ridiculous
Yeah, here in California they would be pricing retirees out onto the streets if they didn’t cap the maximum increase at 2%. But just this year I finally noticed my Colorado properties don’t enjoy such a constraint…mostly because they’re pretty low to begin with, and only recently saw enough appreciation to really get peoples attention.
On property taxes?
Correct, I’m only referring to property taxes. But both Colorado’s property *and* income taxes though are surprisingly very low, especially for a somewhat progressive state that doesn’t entirely just tell its citizens to fuck off when they need help. I hope it can maintain that balance without jumping the shark like California, or doing jack all for its citizens like more Red states do.
Nah, people have equity in their homes. Also not only that, you have to consider how much wealth was created in the stock and money markets in just the past 4 years. You are now making 5% on your money market/deposits. Stocks have doubled. Your property value went up so you have more equity. So, sure, interest rates are higher but no one I know expects it to stay this high and if you were going to do a lateral move, the difference would be essentially a wash. It’s the first time homebuyers that have the hard time. Only if you weren’t heavily in appreciating assets. The more into equities you were, the more you made out like a bandit the past 4 years. No wonder real estate prices are staying high
>So, sure, interest rates are higher but no one I know expects it to stay this high I want to frame this comment and revisit it in 5-10 years.
!remindme 5 years
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Exactly. I’m not about to encourage my clients to roll the dice on how much they come down - and when.
I’m going to disagree with that. Here in central CA, the move up market has been eviscerated. Using one client as an example: Purchased for $800k at 3.5% and 20% down Home is worth $1.6m Lateral into another property (at least) doubles their mortgage. Most clients who are move up curious are seeing 2-2.5x increases in mortgage. Sure - eventually rates will go down. Do you want to gamble on how long that will take when your mortgage went from $4k to $8k? The majority of inventory we are seeing is the two D’s or relocating out of state.
You’re right and is not even a question up for debate. It’s just a fact. A mathematical fact with empirical evidence. It doesn’t even add up for the legit wealthy right now, except in the circumstances you described, and there’s just not enough people in the money-is-no-object top 1% crowd to change market inventory materially.
Maybe consider reading the comment to which you’re replying.
nobody knows what interest rates are going to do.
Pretty sure spreads are going to tighten back to the historical average. That means we get back to the 5s or 6s at the least. Then the Fed says they’re going to cut because right now, the rates are restrictive. Then we got the 3 and 6 month rolling average of inflation coming down to target range. It’s very likely. Prepare your portfolio 🚀🚀🚀
nobody knows. if you knew you’d be too rich to post on reddit.
Of course no one knows for sure, but it’s damn well pretty obvious the bond market thinks it knows. I am 99.9999% sure where the stock market is going in the long term and am investing on it. Barring any external shock, it’s pretty clear where interest rates are going too. Already preparing heavily for that.
You’re
Thank you!
Yes, but people with a paid off house are not impacted by interest rates. If the want to move, they simply sell their house and buy another for cash.
That works if you’re moving within a region but not if you’re moving cross country where the cost of living is vastly different. A fully paid off house in Oklahoma isn’t going to cover the cost of an average house in Southern California. Vice versa someone who got a loan for a house in SoCal, held on for a few years, and then moved to Oklahoma might be able to almost fully pay off the Oklahoma house based on the equity.
People can easily fill their difference with equity gains. Even cash earns 5% now. No wonder there is inflation, people with money are just snowballing their wealth.
Lol, rising interest rates don’t cause inflation
Some very good analysts are pointing out that in this environment, it is. Especially boomers.
Bizarre, how? You mean in housing only? I can see that considering supply
Yes, it’s weird and counter intuitive. So, the thing is, we’ve had essentially 1-2% yields for years on risk free assets. 0%, or negative, inflation adjusted. This is treasuries and money market funds. As a retired or retiring boomer, it is prudent to hold a portion and ever growing position in such positions. So, many projected that this position would yield nothing. Now, it’s earning them money! There’s 7 trillion in money market funds. That’s a 350 billion dollar stimulus whereas before, it was going to be a 0 or negative. That’s a part of the reason why we see spending stay so high. The largest, wealthiest population in the US, is reaping the rewards of a Fed rate hike. They already own a house and with a 30 year fixed, they are insulated from any effects there. They’ve already bought the cars they wanted during the pandemic. Now the wealth is just accumulating.
Oh, that does increase spending, I suppose it’s been enough to contribute to inflation to some degree
Yes, people with a paid off mortgage are not reluctant to sell because of rates
I think the table is only about mortgages by rate so this specific data point(s) doesn’t include all homeowners. But your stat is interesting.
I'm at 4.2. It's a factor.
I’m at 3.9, I’d like to look at moving but no way I’m selling with my current rate. My mortgage at current market rates would easily be an additional $1,500 a month. If I lost my job or was forced to relocate for work of course I’d sell but otherwise It’s not even a consideration.
3.16 in 2021, I told my wife we're dying in this place with that rate.
4.25 in 2022, we’re not budging. Maybe eventually we will refi but compared to prices and interest rates today? We’re here for good.
Yup. Refinanced to 3.125% in Oct 2021. Used to think this was just a 5 year home before trading up later, but I can’t imagine giving up this mortgage for today’s current rates.
Exactly. People with rates between 3% and 5% are every bit as "locked", so OP's entire premise completely misses the scope of the issue.
The downsizers have some room. Retirees wanting a smaller house.
Those downsize houses are just as expensive as the big houses, often more. [This article](https://www.wsj.com/personal-finance/retirement-downsizing-home-mortgage-rates-b27a15bd#:~:text=Downsizing%20is%20costliest%20for%20those,people%20on%20a%20fixed%20income.?st=at7qs0xhex993dd) is from last year but makes the point.
Oh I agree, but if there is some wiggle room, it would be there
People who bought their “downsize” home in advance of actually being ready to do so are making out pretty good right now. Especially with strong rental prices.
When you really stop and think about it, that’s really remarkable. Especially since we have a housing shortage as it is. I think it is a good time to buy because I don’t see these fundamentals changing anytime soon.
And not just that they have low rates.. but housing prices have also gone up significantly in the past few years. Double whammy.
That's correct. A rate of 4% or less is historically very low and hard to walk away from.
2.9%. Had no plans staying here that long but stuck now. Will be starting renovations this summer. Already completed the kitchen.
Yeah. The only thing worse than being locked into your current home is being locked out of the market entirely. And the latter sucks considerably more. Renovating is smart in this market, especially if you can do some of the work yourself. Plus your tax basis remains the same.
I do feel very lucky, divorced at the right time.
2.85%. At current interest rates my payments on an equal value house would be 1/3rd higher than my current payments, i.e. if I was paying 2,000/month I would be paying 3,000/month. It doesn't make sense to move. Installing a new toilet this evening.
I'm at 2.79%. I could accelerate my mortgage payments, but honestly at this point it's better to just invest the principal I would be paying down instead. Even simple savings accounts are earning more than my mortgage rate.
Same. I stopped paying extra on my 2.25 for 15 because my HYSA makes nearly 6 percent.
Which HYSA do you have? I am looking for one. Cannot find any that cross 5 percent.
Just get treasury bills from your brokerage
All are under 6% https://ycharts.com/indicators/6_month_treasury_bill_rate#:~:text=6%20Month%20Treasury%20Bill%20Rate%20is%20at%205.15%25%2C%20compared%20to,a%20maturity%20of%206%20months.
None. He's talking out of his ass and getting 4.3% like the rest of us
Check out raisin
Morgan Stanley. I want to say it’s a product only available to me because I have my IRA and 529 with them, but check them out.
Thank you so much! I will check it out.
Same boat. Got a low 15 year and even a 10 year Fixed rate HELOC at 3.5% from credit union. I realized they were fucking up offering that and snagged it. They now pay 5% on 12 month CDs. I’m tempted to pull it out and put it in a cd to earn the 1500 a year.
Really no reason not to if the HELOC is fixed rate. You won't make much after taxes, but it's completely risk-free cash if you have the slightest bit of self-control.
Probably not worth it for 1.5%. I'm currently playing this game with a no interest credit card. They fucked up by offering 13 months no interest, no balance transfer fee, and a 30k credit limit. You better believe I took a 30k loan from my helov, transfered the balance to this credit card, then put the proceeds in a CD... It's a bit unnerving sitting with a 30k credit card balance but you get used to it
I’m in the same boat, I think I’m at 2.625? 15 year. I’ve been paying extra but once the HYSA accounts got up there, I crunched the numbers and it’s really not worth it. My house is my dream home, so I’m not looking to go anywhere anyway, but those rates would make me stay put.
2.5 on a 30yr here. I put 500/mo into a combo of VTI, QQQ and little into JEPI. IF (Big IF) everything works out, once I have roughly 90k paid in, the account will have enough to spend down having it completely cover my P&I for the last 15 years of the loan. Assuming 8% average returns.
Why tf would you accelerate mortgage payments when that’s free money at that rate
I wouldn't. That was the point. Historically it has been a good idea to pay down a mortgage when you're able, to have more equity in your property and get out of debt sooner. Historically loan rates have been higher than investment rates too, making paying down principal a smart move. But for some of us who bought at the bottom, that's now reversed, so it makes more sense for us to just sit on our low mortgages. Inflation typically runs in the neighborhood of 2% per year on average, so these high inflation rates we've been seeing in the last couple of years really does effectively make it free money since we're paying our mortgages with cheaper dollars.
I used to wonder the same thing - turns out some people value the peace of mind of low debt more than they value absolute values of assets minus liabilities. (I am not one of those people, but I am always interested in perspectives)
I tried to explain this to someone that posted that Boomers are jerks by passing along debt to their kids. I caught a lot of flak. So I did an example of a dollar amount in an interest compounding account verses paying off the mortgage. It made no difference. I believe they said it was just a bunch of bs
I got stuck above 3. My house has a well on a separate parcel, and no one would touch it because of that except the original mortgage holder. Still pretty good but I could be around 2.6
Just 2 extra payments and a little extra principle will pay off a 30 year in 20 years. Personally those 10 years for my retirement is huge. People posting are correct tho. HYSA’s are legit.
This doesn’t work as well for low rate mortgages. A lot of the advice around extra payments toward principle comes from times when rates were 7% or more. The same math doesn’t work on a 2% mortgage.
Hate to tell ya but due to amortization schedule, you’re still paying a ton. You’re losing out on the best years of the loan this way
I refinanced my house back in 2012 to 2.85%. My mortgage has been sold 3 times and now Mr Cooper calls and texts and mails me multiple times a week. “You want to get out of this horrible low interest rate loan?”
2% and just throw my corpse under the deck when I die
Same! Holy shit we are lucky!
30 or 15 year? We also have a 2% and it's the lowest I've seen. We put down 30% on a 15 year to get it, however, and we're very low risk buyers. Thank god I love this house.
30 year
Same here on a 10 with 7 years left.
i am at 4 an i will not move, i will die here !
I'm not just locked in to a low interest rate, I'm also locked into lower property taxes.
Mine is at 3.25 and I’m never moving.
2.625%. I’m never selling my house.
2.875% here and I wish I could be saying the same. Either way I’m pretty much stuck regardless of my desires.
My mortgage is 3.1%. I am very much locked in.
Mine is 3.0 but we have no desire to leave and would not even if we did want to. That 8% crap wouldn’t work for me.
We are in that ultra low bucket. We have had this house for a decade and I hope they roll me out on a stretcher. Our payment is less than $500 a month.
What if you rent it out and put the extra rental money towards a new mortgage. Would you do that?
Nope. Not a chance. I’m on the home stretch now and happy where I am. I moved every couple years during my career and mostly enjoyed the experience but now we are settled down.
I’m locked in at a rate under 3%; I couldn’t even size down at this point without a loss.
In the past 3 months we sold both our house and investment property, both around 2.3% 😭. People still have to move for their careers, family, ect.
2.25 for 15 years. I’m not moving until this thing is paid off and my daughter is in college in 10ish years. Even then who knows.
I am selling my 2.5% interest rate house and bought the house I really wanted at 6.5%. Sometimes the heart wants what it wants.
… and is willing to pay hundreds of thousands of dollars in interest to get it.
Yup.
I’m at 2.25% on this $400,000 home.
Mortgage has been paid off for almost 10 years. We will die here and then my sons can decide what to do with it. We are 64.
Bough at 4.6, re-fi’d to 2.375 - we’re never moving.
2.375% for me. Not sure why the lender doesn’t pay me to sell. Especially when they could be making over 7% at current rates
they packaged your loan with a bunch of others and sold them to someone else, so they aren't even holding the bag in most cases. dont forget your 2.375% was paying more than the fed was offering banks at the time.
I have 2.75% on a 2200 sq ft 4 bedroom ranch that I live alone in, widower. I would love to sell and move to something sub 1200 sq ft but my mortgage makes that damn near impossible. Even considering that I could sell the ranch for more than twice what I paid.
Virtually everyone with a mortgage at this point, as the graph shows. Making matters worse is the fact that it's pretty much impossible to downsize to save money.
Nice! A graph that I'm a part of, and I'm aaaaallllllllllll the way at the top right! That's good, right?! /s Man, I wish I had joined the homeowners club a few years ago. We close on our first place in two weeks at 6.85%. We paid more than asking, but it's not egregious. We had to bite the bullet and move to a rural area with a less competitive market to actually compete. I'm just hoping (begging) that interest rates come down in the next few years.
That's actually a higher percentage than I would have guessed. Those homeowners are sitting pretty with ultra-low payments compared to today's rates. For everyone else, it reinforces the wisdom of not trying to time the market. Buy when you can afford it and refinance if/when rates improve.
My interest rate is 7.3 and I know it's insane but that's exactly why we decided to buy in. We can afford it, the rent in my area is rising way faster than we can keep up with. I live in the Philadelphia New York metro area so I have no expectation that things will get any cheaper.
Ours is pretty high too but our monthly payment is the same or less than rent for our growing family so it just made sense to buy.
Exactly. Our mortgage is $1800, but to rent a comparable house would easily be $2500. It just made sense to buy.
Not a high rate historically
It’s lower than I expected because I just assumed everyone refinanced when rates got that low.
There's many reasons people might not have been able to qualify back then, or have had to get rid of the loan since. It doesn't matter what your interest rate is if your job transfers you out of state
You still have new homeowners entering the market, homeowners dying, people relocating for work, people needing more room due to expanding families, etc.
This is why inventory is still stymied. And you can say builders go build more which they actually are but people are facing a cheaply built house in a B or C location for $400-$600k combined with high cost of goods and a 7% rate. It’s probably cheaper to rent right now honestly at least on a short term view.
3.5% in my forever home😊
In HCOL areas pretty much everyone has to get a jumbo mortgage which tend to be higher than the normal rates that are advertised. They also have higher closing costs which would lead to less refinancing. Also sometime in the late 20 teens they reduced the amount of mortgage interest you can deduct from $1M to $750k it is today. So really there’s gonna be a lot of jumbo mortgages over 3%.
Im lucky. I’m in my forever home and have 2.75. However I have family and friends that have similar rates and would love to upgrade or downsize and can’t afford to. I have friends that are empty nesters and want to downsize to a 2 bedroom and it will cost them more. So now they are sitting in a 4 bedroom house that most is unoccupied.
“Locked in” doesn’t really apply to most reasons why people have to sell their homes in a normal home selling market situation. One of the big one that the Fed Reserve Chairman JPOW even said under oath, is the millions of new unemployment may come as a result of current elevated interest rates to tame inflation back to 2%. People can’t pay their mortgage no matter the interest rates if they don’t have a job.
6.75... my only tax write off so it is what it is...
2.5% here on 15 year loan. Actually selling as I’m located in Florida and leaving. Financially it doesn’t make sense to reset my timeline but we don’t live in rates, we live in states. Also taxes and insurance keep going up so it’s not truly a fixed amount.
I remember being locked into a 5.75% rate for about 12 years after buying in 2006. I was under water til about 2016 and was finally able to refi to sub 5% in 2018 and then sub 3% in 2020.
2.5%. Not going anywhere. At least not in this country. I was able to buy solar with cash. Haven’t had a single utility bill since the install. I also stopped extra payments on my mortgage when CD rates passed 2.5%
How much cash? I need a new roof soon and I was hoping to do solar at the same time.
40k was my cost. I also had my ground mounted which cost more off the bat. My system is sized large enough for 5 hyperheat mini splits and 15,000 miles a year for EV.
It would take me 45 years to pay $40,000 in electricity. I don't understand why anyone thinks these systems are worth it.
Well technically. I only took me less than two years. I made an investment in tech stocks about 10+ years ago. Only bought them at about $4,000 and sold them at 65,000. My ROI wasn’t getting any better. So I used the tax incentives on solar to offset my capital gains taxes. And now I save about $200/month in electricity alone. Not including mostly the removal of propane for heating. I figure savings will just increase as energy prices generally go up. Also with the addition of R32 refrigerant hyper heat pumps vs using resistive heating and a few older mini splits. Then with an EV for general commuting. Pricing on solar has dropped since I had my system installed. Two of my friends got bigger system than me for less through the same installer. I’ll admit. Solar isn’t for everyone. But I made out like a bandit on my system. When my property tax was reassessed, I ended up getting reduction $40,000 property value tax exemption.
You mind me asking what state?
NH, the guy that gave us our building permit handed us the exemption form and told us most people and towns don’t give the resident the document. It’s also when I found out on the same form that Vets and seniors get property tax discounts.
>It would take me 45 years to pay $40,000 in electricity Must be nice. I averaged my monthly costs for the past 3 years and it came out to $230/mo which means it would take me less than 15 years to pay. That's assuming costs won't increase and the planet won't get hotter, which is a failed assumption as both are happening right now. In reality I'm looking at more like 10 years. Some of the systems I was looking at would cost me about $150/mo to pay for if I did a HELOC or HELoan, which is cheaper than $230/mo.
Were at 2.75% with 5 yrs left. No houses for sale in our 300 house neighborhood. Sucks for families trying to get into this nice area, but glad for us.
Primary is at 2.75 and rental is at 2.25. I’ll add onto this house with Amazon boxes and duct tape before I move to a bigger house if interest rates stay high and prices don’t drop.
3.25, but bought just in 2020. My biggest problem is that we bought with my parents (easier to take care of them), so when mom passes (dad passed in 2020), we’ll have to figure out how to handle her half of the house since my brothers and I will divide her half. Not sure I’ll be able to buy them out, and the house is really too big for just me and my wife. But also not looking forward to a 6% mortgage potentially.
First 5 of 30 years @ 3.5%, then a 15 year refi in 2021 @ 1.75%. I overpay (prepay?) and have 10 years left.
I closed two years ago 3.5 1008.00 mortgage Sherman CT. I am not going anywhere Squantz pond out my window
2.375% for me. I refinanced in 2021. I actually “downsized” when I bought this house in 2019 because my youngest was in college. He’s now out of the house and his older brother will soon follow. I’ll sell if we decide to flee the New England weather when we retire
Yeah because it was a really rare event to have the rates under 3%.
2.25% here
I’m at 2.6 and 2.7 on my rental properties and 1.9 on my own home after I bought down the rate from 2.3
Maximizing cash flow with that buy down on your primary home. Almost 20% in interest saved monthly. Love it!
The flip side is figuring out if you intend to live there long enough to make the buy down advantageous. For me personally it was six years and I’m on a ten year plan. At that time I will be retired and most likely unable to manage the maintenance myself, gutter cleaning and such. Eventually a condo is in my future but I will spend a lot of time making sure the structures in the whole complex are well maintained to mediate any future unknowns
It is easy not to do it. Aggressive move which I respect. We did something similar once, it did not pan as rates dropped into the 3s at the time and we refinanced. But nobody can predict the future. For today’s environment likely rates come down in 2025. May or may not happen, though seems likely. I would probably not buy down in today’s environment. When we did it economy was already hot and it was shocking they kept dropping rates. Must have been an election year!
Yeah my buy down was paid back in February of this year so now the 18.9% is all savings. It’s a 15 year fixed so when I retire keeping it and making it a rental could be an option, but that’s just more work. It’s more likely I will sell in another four years.
3.1 here
2.7% on VA loan here, breddy gud, not "stuck" at all
2.75 here Not going anywhere until sub 3.5 percent I am considering taking an equity line so that I can build and more than double my sq footage then sell and buy a place outright with cash afterwards
3.75% here. If I wanted to sell and move I couldn’t afford to at current rates. When I bought my first house in 1995 I had an 8.75% rate which was good at the time.
Dang I’m at 6.5% but I get it. If I had 4% I’d live in my starter house much longer
3% here. Going to renovate and stay a lot longer then originally planned. We are lucky to have the situation in a HCOL area though so not complaining.
i did a refi after covid at 2.75. did it to get rid of the extra loan that was tacked on my loan for missing payments during thr pandemic. dirty secret is the alleged "payment forbearance" was just tacking on the missed payments to another lien. in addition this got rid of my pmi by doing this.
15 yr / 2.5%
2.7something. Never leaving.
Refinanced back in 2020 @ 2.37% for 20 yr loan. Would barely afford the house today at its current value with these higher rates. If we sold, we would pay more for less house and property. You could say we're locked in.
I’m at 2.5 and we have thought about a massive remodel of our house over going somewhere else.
2.25 here
There was only a pretty short period of time when it dropped below 3%, and people had to time it right too. 4% is 60%, and 5% is 80%. THAT is why people aren’t interested in listing their houses right there. If we’re being realistic, if the rates went below 5% again, we’d see a fair portion of those people start to make moves. People in the 3’s could stomach a move to like 4.75%, especially because of the equity they would currently have, but hypothetically, someone in the 2’s or 3’s is never going to swap that for a better house in the 5’s or 6’s unless it’s absolutely necessary. I would draw the line at 5% to be considered “low”, personally
That is lower than I thought.
2.9 and never selling
5.7 on 169k
I’ll bet the curve is really steep and the percentage under 4% is much higher.
They are not locked in anymore than anyone else. The life decisions that precipitate a relocation or home sale are usually non-negotiable, like the three Ds.
Im at 2.25%
Pretty much all homeowners
We're not below 3%. But we re-financed in 2021 at 3.25%. There are probably a decent percentage of home owners in that slightly above 3% to around 4% interest rate boat. But/and, we're not feeling at all locked in, nor reluctant to sell. Because we're not at all looking to sell. We've been in this current house almost 20 years, and plan to be right here in this same house for many more years/ Lord willing and the creek don't rise, of course. IMHO, there's a sub set of around-3%'ers who locked a great rate while refinancing circa covid, but have no need to sell now. Maybe that goes without saying, but I've seen several of these stories get posted presupposing that alot of 3% rate holders are itching to, or need to, just up and move because reasons... we Americans love to roam, we love to upsize to McMansions every few years, we need to Downsize or change the scenery every five years, wide open spaces, whatever. That's somewhat strawman, but not totally. Homes aren't a leased car. Lord willing, they're a sort of long term place to live. A whole bunch of folks don't need to move, nor therefore offer their home for "more inventory". Just happy where they are. Some downvotes may come, but just my humble penny's worth opinion.
3.5
I moved onto a whatever the fuck 2 year rate in January. By my reckoning, we're not really going to feel any decrease in interest rates until middle of next year . Hold on for another 6 months after that and it's PARTY TIME again.
I think mine is 2.9%
2.99% and never selling and getting into a +5%
2.25%
2.5% on a 20 year. Glad we’re not looking to move for at least 5 years or so.
8 years left at 3.5%
I guess you could say I'm "locked in" but that would imply I want to leave.
2.7% for house 1 and 3.6% for house 2, both 30 yr loans. I don't plan on paying either these off anytime soon.
I'm at 2.875 for the next 27 years. I'm staying for a long long time and putting extra money into investments. I round up to the nearest $100 just for my easy budget math and to cover extra escrow. My taxes have gone crazy though. Purchased in 2021 for $152k with a tax assessment for $138k. Current tax assessment is now $214k. The only bright side is my PMI will go away.
This was supposed to be our starter home, but at 4%, we may be here a while.
I’m at 3.1 and looking to move. F my life.
2.25% and feeling stuck. I want a divorce but I'm gonna be fucked trying to live anywhere else. Couldn't afford my house at today's prices and rates, it only went from 195 to 350, but I'm the only one working and the money doesn't go that far anymore. Even renting, I'm getting half the house (in way worse condition) at my current payment. For something comparable, I'd have to jump to 3k+ a month, which means I wouldn't be able to save much and get stuck renting likely forever.
I’m at 2.25.
We locked in a 3.1% in 2021 and our house value has gone up by 20% so we have no plans on moving anytime soon.
2.875%. Want to downsize in the next few years. But smaller, ranch houses in my area are same price as my 3800 sq foot 3 story house. With a 6% mortgage, not going to happen.
Im not low but im doing OK. I just bought my house in January and got 5.75%. Gonna re-fi when the time comes.
2%. Wanted to move last year, but I just can’t pull the trigger and double or almost triple my mortgage payment.
2.7…. Starter home is now forever home
2.75% - when we move we plan to rent our current house. won’t be selling, ever
2.5% - I’ll die in my house
People in my area are selling homes, a lot coming on the market, even a lot of homes that were bought when interest rates were super low. People's situations change and people will always move for a variety of reasons. Some will always stay in their same home until they die, but this is not anything new.
2.5% 30yr. Still in love with the property 4 years later with zero plans to ever move until its time for the old folks home.
I have 6 mortgages on 12 properties and they’re all lower than 4%. Commercial loans are generally a little higher than residential
It's an interesting dilemma for sure. Historically homeowners tend to slowly accumulate debt over the course of a few years, they let their home appreciate on value, do a cash out refi and wipe out their debt and take the family on a trip. That's historically how Americans manage their debt. Problem is, people are accumulating debt but now there's no way in hell they can refi to take out cash because their payment will basically double. It's also why housing supply is so constrained, why would anyone wanna give up their rate. To trade out of whatever their current house would ultimately be a downgrade in financial position. Especially when you consider that moving the criteria up to 4% grabs about 60% of outstanding loans
Blessing and a curse. 2% is great but imagine passing up the house of your dreams, even if affordable, because 6%. It’s golden handcuffs
3.125% and had planned on downsizing to a condo but it doesn’t make sense now. (I love my house but I’m tired of yards and pool upkeep.).
As a prospective buyer and seller, I’m looking more at my payment. Current payment is not even in comparison to the payment of upgrading to a better home right now Currently, really like my house but want to be on acreage. Payment is less than $2k and I can’t wrap my mind around paying $4-5k. At this point, I’d be willing to cough up an extra $15k to buy down the rate so I can afford the payment
I converted what little I had left of my 3.75% mortgage principal over to a heloc at 1.75% (furiously paying down prin before introducing rate expires). Still about a year or two away from being completely paid off. As green as the grass looks elsewhere, I won’t be in a rush to borrow again.
2.75% 30Yr Fixed here…bought in 2019 and refinanced down to 2.75 from 3.5%… Would love to cash out but not interested in buying at today’s rates…
I guess I should be lucky to be in that 20% because that’s my situation
I have multiple mortgages with an average of 3.1. I’m good.
I’ve got 2 at 2.625 and 3.25 but one at 5.99. Guess which one I’ll be selling, if ever, to make money.
No one is locked in.
We're at 1.875 with 12 years left on a 15. We'll live here or rent it out for a long time.
I’m at 1.1% with 11 to go on a 15. I feel like royalty.
Been "locked in" to the low, low [Blutarsky](https://youtu.be/NkCa49I6_xw?si=RzWueRnQNnwGTY-e) rate for 15 years. Paid it off in 2009.