According to a recent CNBC report, this trend is emerging as a critical factor in the broader discussion about housing affordability.
In 2022, when mortgage rates were at historically low levels, only 10% of homeowners held a 30-year mortgage with an interest rate above 5%. Four years later, this proportion has risen to over 30%, according to data from ICE Mortgage Technology, with roughly 20% of borrowers carrying rates above 6%.
This increase has affected home sales, which have remained subdued in recent years. According to the National Association of Realtors (NAR), home sales in 2024 totaled 4.06 million units, a historically low level, essentially unchanged from 2023, following a record 6.12 million sales in 2022.
The recent rise in sales, combined with cash-out refinancings, has increased the share of borrowers with higher interest rates. At the same time, the Trump administration has made reducing mortgage rates a key objective to improve housing accessibility.
Recently, the President announced a plan to purchase over $200 billion in mortgage-backed securities (MBS) from Fannie Mae and Freddie Mac. While the full impact of this measure on mortgage rates is still under discussion, the announcement alone has already led to a modest decline in rates. Market estimates suggest that these purchases could lower the 30-year fixed mortgage rate by approximately 0.125 percentage points, bringing it closer to 6%.
If the average 30-year fixed rate falls to 6%, roughly 5.5 million homeowners could benefit from refinancing, saving at least 0.75 percentage points on their rate—an amount that makes refinancing costs economically viable, according to ICE Mortgage Technology. If the rate drops to 5.88%, this number increases to 6.5 million homeowners.
Andy Walden, head of research at ICE Mortgage Technology, notes that the most popular mortgage rate over the past 3.5 years has ranged between 6.875% and 6.99%. Prospective buyers have sought to reduce rates into the high-6% range, and the recent 15-basis-point drop following the MBS purchase announcement provides an additional incentive for refinancing.
In practice, refinancing applications are currently about 120% higher than a year ago, according to the Mortgage Bankers Association.
Regarding home sales, the past four years have been dominated by the “rate lock-in” effect, as homeowners were reluctant to give up the low rates they had secured. ICE Mortgage Technology reports that entering 2025, there were approximately 39 million homeowners with rates below 5% and 12 million with rates below 3%. However, only 6% of these homeowners gave up their low rates through refinancing or home sales, while 95% retained their rates.
For new buyers, a 15-basis-point drop in the 30-year fixed mortgage rate translates to roughly $35 per month in savings for an average property, or the ability to purchase a home about 1.5% larger. As Walden notes, this reduction is positive but not large enough to radically change market dynamics.