At today's rates, most homeowners would have to finance a new home at a higher rate than their current one, creating an incentive to stay put.
Nearly 82% of homeowners feel "locked-in" by their existing low-rate mortgage, according to data from Realtor.com.Bob and Terri Wood, of Mobile, Alabama, with their grandson.Bob Wood, 66, has been thinking of selling his home in Mobile, Alabama. The finance professor and his wife, Terri, purchased the 5,000-square-foot house with a pool nearly a decade ago. "It's probably time to downsize," he said. They would also like to be closer to their grandchildren in Tennessee.
Those homeowners would need to finance a new home at a higher rate than the rate they currently hold, adding hundreds of dollars a month to their mortgage payment, which has created an incentive to stay where they are. For them, opting not to move is "the right strategy." With home prices and interest rates on the rise, "the consumer is best advised to stay put," Philipson said.A house for sale in Arlington, Virginia, in July of 2023.golden handcuff effect
. The term is often used to describe financial incentives employers may offer to discourage employees from leaving a company. For homeowners, a low mortgage rate is similar. Most homeowners today have mortgages with interest rates below 4% or even below 3%, after moving or refinancing when rates hit record lows duringNearly 82% of home shoppers said they felt "locked-in" by their existing low-rate mortgage, according to a recent survey by
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