A good rate doesn’t compensate for a home that no longer works for you. Life changes, and sometimes your home needs to change with it. And you are not the only one making that choice.
The lock-in effect starts to diminish
Many homeowners have been stuck by something the experts call “it.” lock-in effect. Then you do not move because you do not want to take out a higher interest rate for your next home loan. But facts by Federal Agency for Housing Financing (FHFA) shows that the lock-in effect is slowly starting to diminish for some people.
The share of homeowners with a mortgage interest rate lower than 3% (the yellow in the graph below) slowly decreases as more people move. And although some of the people with a rate above 6% are first-time buyers, the number of homeowners with a rate above 6% (the blue) increases as others charge higher rates for their next home:
And while it may not seem that dramatic, it’s actually a pretty remarkable shift. The share of mortgages with an interest rate above 6% just reached a point 10 years high (see graph below). This shows that more and more people are getting used to the current rates as the new normal.
Why are more people moving now if this means a higher rate?
Why are more people moving now if this means a higher rate?It’s simple. Sometimes they can no longer put their lives on hold. Families grow, jobs change, priorities shift, and a home that once fit perfectly may no longer fit at all – no matter how good the price was. And that’s okay. Like Chen Zhao, head of Economic Research at Redfin, explains:
“More and more homeowners are deciding it’s worth moving, even if it means giving up a lower mortgage rate. Life does not stand still– people get new jobs, grow their families, downsize after retirement, or simply want to live in a different neighborhood. Those needs are starting to outweigh the financial benefits of sticking with a very low mortgage rate.”
First American refers to these life motivators as the 5 Rev:
- Diplomas: People with a university degree usually earn more, and that provides more purchasing power. Maybe you bought your house when you were younger and now that you’ve graduated and have a rising career, you’re ready to move up.
- Diapers: You have outgrown your space. When you welcome a new baby, your current home may no longer be suitable.
- Parting: Whether it’s ending a marriage (or starting one), it can create the need for a new place to call home.
- Downsizing: You’re ready to cut back. Maybe the kids have moved and it’s time to simplify. Smaller house, less maintenance, more freedom.
- Dead: If you have recently lost a loved one, you may realize that you want to be closer to your family. Life is too short to live far away from the people who matter most.
Whatever your reason, here’s what to think about. Yes, your low rate is great. But staying put means your life could be on hold. And maybe that doesn’t work for you anymore.
According to Realtor.comNearly 2 in 3 potential sellers have been thinking about a move for more than a year. That’s a long time to pause your plans. To your needs. About your family’s goals. So maybe the question isn’t: “Should I move?”
It’s actually: “How long am I willing to stay somewhere that no longer suits my life?”
Because we’ve already seen rates drop from their peak earlier this year. And they are expected to decline some more in 2026. When you layer that on top of the very real reasons why you might need a new home, it could be enough to finally move the needle for you.
In short
Life doesn’t wait for the perfect rate. Maybe you shouldn’t either.
Now that mortgage rates have reached their peak and are expected to drop a little further in 2026, moving may be more feasible than you think. If you’re ready to see what’s possible in your market, contact a local agent and lender.
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