Rate lock-in persisted, but a key threshold hints at a slow market reset
The balance of American home loans tilted in a new direction in the third quarter of 2025, as mortgages with rates above 6% edged past the share locked in below 3%, marking a symbolic break from the ultra-cheap money that powered the pandemic housing boom.
Realtor.com analysis of Federal Housing Finance Agency data showed that 21.2% of outstanding United States mortgages carried rates of 6% or higher in Q3 2025, just above the 20% share with sub‑3% loans.
More than half of borrowers, 51.5%, still held rates at or below 4%, and nearly 69% paid 5% or less.
“Mortgage rates above 6% now represent a larger share of outstanding loans than the ultra-low rates that defined the pandemic-era housing boom,” Danielle Hale, chief economist at Realtor.com, said.
“This crossover reflects a gradual resetting as some households trade in low-rate mortgages for higher-rate loans or enter the market for the first time, even as rate lock-in continues to limit the pace of inventory recovery.”
Rates peaked at about 7.04% in January 2025 before easing into the low‑6% range by year’s end, but they remained above 6% since September 2022, continuing to shape mobility and supply.
Lock-in still dominated, even as the mix shifted
Nearly one‑third of loans sat in the 3% to 4% band, with 17.1% between 4% and 5% and 10.2% in the 5% to 6% range, according to the FHFA database. That distribution meant roughly four in five mortgages still carried rates below 6%, a pattern other industry analysts also described as a “persistent lock-in effect” that constrained supply and kept prices elevated.
Realtor.com estimated that the typical owner who sold and bought a median‑priced home at current rates would have faced a monthly payment almost $1,000 higher, a gap that helped keep would‑be sellers on the sidelines.
Hale said modest dips into the low‑6% range already tempted some life‑event buyers and “swappers” willing to give up cheaper loans, while builders’ rate buydowns and incentives appeared to be supporting activity in the 4% to 6% brackets.
One cited survey suggested that about 40% of potential buyers saw a purchase as feasible if rates fell below 6%, and 32% if they dropped under 5%, but the release did not identify the survey sponsor or methodology.
What higher-rate loans meant for the next phase
The shift in rate distribution arrives as national supply moves closer to balance, even as inventory stays tight in lower‑priced segments and new‑build stock carries more of the load.
Lock‑in era has pointed to the same tension: stronger construction pipelines and selective pockets of buyer leverage set against entrenched owners reluctant to trade sub‑4% financing for far costlier debt.
Forecasts suggested that tension would not disappear quickly. Analysts expected 30‑year fixed rates to hover in the low‑ to mid‑6% range through late 2025, easing only gradually thereafter. That outlook implies a long, uneven adjustment in which higher‑rate mortgages took a growing share of the book, but pandemic‑era loans continued to anchor behavior.
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