Most Mortgages Hold Rates Below 6%
About one-third of mortgages have rates between 3-4%, 18% between 4-5%, 9.9% between 5-6% and 18% at 6% or higher, new research shows.
NEW YORK — In January, mortgage interest rates reached 7.04%, after climbing through most of 2024's fourth quarter, but rates have eased to the high 6% range since then, Realtor.com research found.
Potential home sellers remain "locked in" with lower rates, and their unwillingness to sell has limited housing inventory. Mortgage interest rates have been above 6% since September 2022. Although housing supply has improved in the last 12 months, inventory is still below pre-pandemic levels, which has increased buyer competition and pushed prices on houses upward.
The housing supply has experienced an influx of new construction, with the new home share of inventory higher than pre-pandemic levels. As a result, new home sales climbed annually for the majority of months in the past couple of years.
In July 2020, the mortgage interest rate on a 30-year fixed rate loan was under 3%, and it remained there through September 2021. As of 2024's third quarter, 20.9% of outstanding mortgages had an interest rate under 3%.
About one-third (33.2%) of outstanding mortgages have interest rates between 3% and 4%, while 18% have interest rates between 4% and 5%. Additionally, 9.9% of outstanding mortgages have rates between 5% and 6%, while 18% have a rate of 6% or more.
Altogether, more than 50% of all outstanding mortgages have a rate of 4% or lower, and nearly three-quarters have a rate of 5% or lower. By the end of 2025, the share of mortgages with rates under 6% could fall to 75% of all outstanding loans.
A recent survey also found that 40% of potential buyers would consider buying a house if mortgage rates were below 6% and 32% said they would buy a home if rates were under 5%.
Source: Realtor.com (04/01/25) Jones, Hannah
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