WASHINGTON—A new study has found there is much more to the decline in the supply of existing homes for sale than just higher mortgage rates.
With mortgage rates doubling in 2022 and rising even further in 2023, Fannie Mae’s Economic & Strategic Research (ESR) Group surveyed homeowners, including those with and without a mortgage, to better understand the so-called mortgage rate “lock-in effect” – or the disincentive for existing homeowners to sell their homes because their current mortgage rate is well below current market rates.
Using the Fannie Mae National Housing Survey (NHS) to conduct a special topic study, the ESR Group asked consumers if they planned to stay longer in their current homes than originally intended and, if so, why.
The Findings
Among the findings:
- An equal share (29%) of people with a mortgage (mortgage borrowers) and outright owners (homeowners without a mortgage) said that they do plan to stay in their home longer than originally intended, while 45% of mortgage borrowers and 49% of outright owners said they do not plan to stay in their home longer than originally intended
- While mortgage borrowers indicated that being “locked-in” to a low mortgage rate was the leading reason for staying longer in their homes (21%), there were other reasons not far behind, including that they like their current home (19%) and that home prices are too high to buy another home (13%)
- While the lock-in effect is real for many consumers, the ESR Group said it found the full range of reasons provided by mortgage borrowers and outright owners for planning to stay in their homes longer paints a significantly more nuanced picture. Several reasons, including simply liking the home and placing value on living near family, friends, and their workplace, have also contributed to the lack of supply
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