Are you ‘trapped’ in your home by your low mortgage rate? Many homeowners are, survey shows.

Photo (c) F Stop 123 - Getty Images

Homeowners with a 3% mortgage rate don’t want to give it up

It’s easy to understand how high mortgage rates are preventing people from buying homes. But can existing low interest rates stop people from selling? Apparently, they can.

There is a near record low inventory of homes on the market as the spring buying season gets underway and a survey by found that low interest rates are a primary reason. The survey shows that  82% of current homeowners who would like to sell feel “trapped” in their homes because they don’t want to give up their low mortgage rate.

As a result, more than half of seller-buyers – 56% –  who are planning to sell in the next 12 months said they are waiting for rates to come down.

Mortgage rates were below 4% over most of the last decade when millions of homes were bought and sold. They fell below 3% during the pandemic. Now, the average 30-year fixed-rate mortgage is around 6.5%, making a huge difference in the monthly payment.

"One positive aspect that came out of the pandemic was historically low mortgage rates – and many people took advantage of this opportunity to buy their first home, upgrade to a more expensive home or refinance the home they were in," said Chief Economist Danielle Hale. "Unfortunately, this comes with a bit of a catch-22, as homeowners who locked in a 30-year fixed rate in the 2% to 3% range don't necessarily want to give that up in exchange for a rate in the 6% to 7% range."

Homeowners are gaining equity

On a positive note, most current homeowners who would like to sell are expecting a hefty profit when they finally do sell. Eighty-five percent of potential sellers said they are happy with the amount of equity they have in their homes. Specifically, 74% estimate that they have more than $100,000 in home equity and 20% estimate that number to be more than $300,000.

Home prices have fallen in the most expensive markets but elsewhere, they have actually gone up. In fact, on a nationwide basis, home prices rose in February for the first time in seven months.

The S&P CoreLogic Case-Shiller U.S. National Home Price index rose 0.2% compared to January, ending seven consecutive months of price declines. A report from the  Federal Housing Finance Agency (FHFA) showed prices increased even more – 0.5%.

Take a Home Warranty Quiz. Get matched with an Authorized Partner.