REAL ESTATE INSIGHTS
Harris Real Estate Daily
By Tim & Julie Harris · January 4, 2026
For the past several years, one idea has dominated housing headlines:
Homeowners with ultra-low mortgage rates are frozen in place.
The logic seemed airtight. Why would anyone with a 3% mortgage sell their home just to take on a loan north of 6%?
But here’s what the data now shows:
They are selling anyway — slowly, steadily, and for reasons that have nothing to do with interest rates.
Below-4% Mortgages Are Fading — Not Because of Rates, But Because of Life
According to recent federal mortgage data, loans with interest rates below 4% now represent just over half of all outstanding mortgages, down meaningfully from their post-pandemic peak.
That matters because those loans once dominated the market. During the refinancing surge of 2020–2022, homeowners rushed to lock in historically low payments. For a time, it appeared those mortgages might stay in place indefinitely.
They didn’t.
Instead, they are being paid off — not en masse, but consistently.
Why?
Because real life doesn’t pause for interest rates.
People still:
Change jobs
Retire
Divorce
Marry
Inherit homes
Downsize
Upsize
Relocate for family or health
When those events happen, the mortgage — no matter how attractive — gets paid off.
The Market Is Not Frozen. It’s Slowly Thawing.
This distinction matters.
The housing market isn’t “stuck.”
It’s transitioning.
Ultra-low-rate mortgages are disappearing not because homeowners suddenly like higher rates, but because time and circumstance eventually override financial optimization.
Even a homeowner who loves their 3.25% mortgage cannot take it with them forever.
As a result:
The share of sub-3% and sub-4% loans continues to shrink
New mortgages reflect today’s higher rate environment
The overall mortgage pool is normalizing — gradually
This is exactly what a long-cycle housing market looks like.
Why This Is Good News for Real Estate Professionals
For agents, this trend signals something critical:
Turnover is returning — quietly and unevenly — but persistently.
The mistake many agents make is waiting for rates to “fix everything.”
That’s never how housing actually works.
Homes don’t sell because rates hit a magic number.
They sell because people’s lives change.
The agents winning in today’s market understand this and adjust accordingly:
They focus on life-event driven sellers, not rate-driven ones
They build long-term relationships instead of chasing short-term rate dips
They educate clients realistically — not emotionally
Inventory doesn’t come back all at once.
It comes back one decision at a time.
The Lock-In Effect Was Real — But It Was Never Permanent
Yes, low mortgage rates reduced mobility.
Yes, they slowed transactions.
But the idea that homeowners would never move was always flawed.
Mortgages are financial tools.
Homes are places where life happens.
And life always wins.
As more low-rate mortgages age out of the system, the housing market regains flexibility — not explosively, but sustainably.
That’s not a crash narrative.
That’s a normalization narrative.
And for prepared agents, it’s an opportunity narrative.
Harris Real Estate Daily Takeaway
Stop waiting for rates to save your business.
They won’t.
Instead, focus on:
Relationships
Life-stage conversations
Long-term client education
The market is already moving again — just not loudly.
Agents who understand why homeowners move will always outperform those who obsess over when rates change.
Written by Tim & Julie Harris
— Real Estate Coaches & eXp Partners
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