Buying a house in the United States today is not an option for many citizens due to the high mortgage rates they would have to face. This response from Americans is linked to the effects of the low mortgage rates from about five years ago during the coronavirus pandemic. According to a recent report by Realtor.com, homeowners who bought around 2020 faced historically low mortgage rates and are not willing to sell their homes to pay higher rates. This is known as the “lock-in effect,” and it results in lower market turnover.
However, according to Freddie Mac, the Federal Reserve has confirmed that the 30-year fixed rate has dropped to 6.22%, with an annual average of 6.72% according to Bankrate’s results. This means that compared to rates in January, a current buyer would have a monthly mortgage of around $2,269, potentially saving approximately $200 on each payment.
Problems accessing housing in the United States
Due to the current high mortgage rates in the United States, buying a house is not an option for many. An estimated mortgage increase of around $1,000 in the current market is being rejected by buyers, especially those who purchased a property around 2020, during the height of the coronavirus pandemic, when mortgage rates hit their historically lowest limits.
According to a recent report by Realtor.com, buyers are refusing to sell their homes to pay higher rates. According to real estate expert Hannah Jones, this is known as the ‘lock-in effect.’ In the report, she stated, ‘Closed markets not only slow down home sales but also reshape the entire housing ecosystem. When a large number of homeowners have mortgages far below prevailing rates, fewer choose to list their homes, leading to chronically low inventory, reduced mobility, and lower turnover”.
Data indicates that, as of August 2025, only 22.1% of outstanding mortgages were originated, meaning the entire process from application to closing that completes and activates the mortgage was carried out. According to Jones, ‘Homeowners across the country found themselves unable or unwilling to sell, because buying another home in the same area would require taking on a much more expensive mortgage”.
Not everything is lost
According to data from Freddie Mac, the Federal Reserve has announced that the 30-year fixed rate has dropped to 6.22%, and Bankrate’s data calculates that the average for the year has been 6.72%. This means that, considering that the average home price in the United States is around $410,000, if an owner buys in December and pays 10%, with the current rate, he will have a principal and interest mortgage of only around $2,269.
This would result in a monthly mortgage of about $2,470, potentially saving approximately $201 on each payment. Although the percentage has decreased from 7.04% in January to the current 6.72%, it is not enough for many buyers.
30-year monthly mortgage
See how 30-year monthly mortgage costs vary at different interest rates:
January 2025: 7.04%
- 20% down payment: $2,195
- 15% down payment: $2,332
- 10% down payment: $2,470
Current: 6.22%
- 20% down payment: $2,017
- 15% down payment: $2,143
Frequently asked questions
What is the “lock-in effect”?
It’s when homeowners don’t sell their houses to avoid losing the low rates they got in 2020, which reduces the supply of homes on the market.
How much have mortgage rates dropped recently?
The 30-year fixed rate fell from 7.04% in January to the current 6.22%, according to Freddie Mac data.
How much money can be saved with the current rate?
An average buyer can save approximately $201 per month on their mortgage compared to the costs at the beginning of the year.