Throughout the pandemic and several years before, mortgage rates were really low. But the Federal Reserve raised interest rates to tame inflation, sending mortgage rates up along with them. So everyone who locked in a low mortgage rate before they soared are sitting on a gold mine. Their fixed debt is lower than what anyone could get in our current economic environment. Who wants to give that up? 

Nobody, unless they have to. And some people do, because there are sellers out there who want to off-load their homes, which is why there were more listings this year than last year. Still, this year’s spring selling season was muted, to say the least. And it turns out that about 87% of outstanding mortgage debt has a rate below 6%, according to Realtor.com’s analysis of data from the Federal Housing Finance Agency, as of the fourth quarter of last year. The mortgage rate to outstanding share of mortgages ratios are as follows: 

• Below 3%: 22.20%
• 3% to 4%: 35.90%
• 4% to 5%: 18.90%
• 5% to 6%: 9.70%
• Above 6%: 13.20%

“Altogether, this means that more than half of outstanding mortgages have a rate of 4% or lower, and more than three-quarters have a rate of 5% or lower,” Realtor.com said. Meanwhile, the average 30-year fixed daily mortgage rate is 7.04%, and the weekly mortgage rate is 6.95%. 

“As a result, many homeowners have chosen to stay put, holding off on listing their home for sale until mortgage rates come down,” the analysis read. “Based on a recent survey, 82% of those looking to sell their home and purchase a new one feel ‘locked-in’ by high mortgage rates.”

Think about it like this: If you were to buy a $600,000 home, after putting 20% down, with a 3% mortgage rate, your monthly payment would be about $2,024. With the same circumstances, but a 7% mortgage rate, your monthly payment would be roughly $3,193; (neither calculation includes taxes or insurance). That’s a big difference. Not to mention home prices have skyrocketed, too; in March, national home prices hit their ninth all-time high over the past year. So it’s not necessarily true that a $600,000 home three years ago would still be valued at as much today. 

Either way, there are several estimates on the lock-in effect, though they all tend to indicate the same thing: that a large share of outstanding borrowers have a below-market mortgage rate. According to Apollo Global Management chief economist Torsten Slok, 63% of outstanding mortgages have interest rates below 4% (before the pandemic, it was only 38%, he said). For its part, Capital Economics has the average rate of all outstanding mortgages pinned at about 4%. 

So what will it take for people to sell? Apart from the usual reasons—marriage, divorce, kids, career changes, or death—some suggest the magic mortgage rate might be anything below 6%. As of last month, Fannie Mae predicts the average 30-year fixed mortgage rate will end the year at 7%, for one. And it seems the Fed has only penciled in a single interest-rate cut this year.