The Cheap Mortgage That Made Moving Expensive

How can a cheap mortgage make it harder to move—even when you have plenty of home equity? The answer starts with what happens to the loan when you sell. We compare the same $300,000 mortgage at two illustrative rates, follow a loan through five years of payments, and separate home equity from the value of an old borrowing deal. Then we explore mortgage lock-in, the homes that never reach the market, and why fewer sellers can also mean fewer buyers. The examples use U.S. dollars and fixed-rate mortgages. Payments are principal and interest only, excluding taxes, insurance and fees. Historical mortgage averages are dated observations, not current offers. The roughly 1.7 million fewer home sales is the authors' modeled estimate for 2022 Q2–2024 Q2 in the August 2024 FHFA working-paper revision—not a count of canceled moves or today's market. Original Everyday Upside lesson with synthetic narration and original illustrations. General education, not individual financial advice. CHAPTERS 0:00 Same house, higher payment 0:45 One housing market, two borrowing costs 1:51 What a low rate actually buys 3:26 Equity moves. The old deal usually doesn't. 4:49 The remaining-term trap 6:22 Why homes stay off the market 7:49 Fewer sellers can mean fewer buyers 9:27 Assumptions, rentals and refinancing 11:06 What the old loan is really worth 12:17 The cost of recreating the whole arrangement SOURCES 1. FHFA: mortgage lock-in, August 2024 revision (PDF) https://www.fhfa.gov/document/wp2403.pdf 2. FHFA: research-data qualifications (PDF) https://www.fhfa.gov/document/wp2403-... 3. Freddie Mac: January 7, 2021 mortgage average https://freddiemac.gcs-web.com/news-r... 4. Freddie Mac: October 26, 2023 mortgage average https://freddiemac.gcs-web.com/news-r... 5. Freddie Mac: 2022 survey-methodology change (PDF) https://www.freddiemac.com/research/p... 6. CFPB: fixed versus adjustable rates https://www.consumerfinance.gov/ask-c... 7. CFPB: how mortgage repayment works https://www.consumerfinance.gov/ask-c... 8. CFPB: equity, assumption and refinancing terms https://www.consumerfinance.gov/consu... 9. CFPB: assumption disclosure, 1026.37(m)(2) https://www.consumerfinance.gov/rules... 10. Freddie Mac: permitted assumptions and transfers https://sf.freddiemac.com/articles/ne... 11. VA: secondary borrowing with an assumption (PDF) https://www.benefits.va.gov/HOMELOANS... 12. VA: assumption approval and seller liability (PDF) https://www.vba.va.gov/pubs/forms/vba... 13. IRS: rental income and expenses https://www.irs.gov/taxtopics/tc414 14. CFPB: historical mortgage-rate comparison https://www.consumerfinance.gov/data-... #Mortgages #HousingMarket #EverydayUpside