Homeowners who took advantage of low interest rates years ago now face mortgage rates upward of 8 percent and aren’t moving. Referred to as the “lock-in effect,” those rooted residents have dramatically affected what has become an inventory-depleted housing market. But those locked-in homeowners are also relishing near-record equity levels that have built up in their investments.
Bankrate’s national survey of lenders reported that the average 30-year mortgage was under 3 percent in early 2021, during the global pandemic. With homeowners now sitting on those interest rates, mortgages have amassed $1.5 trillion in equity in the past 12 months, according to CoreLogic, with total net equity hitting $17 trillion at the end of the first quarter of 2024.
