For years, ultra-low mortgage rates felt like a golden handcuff for homeowners. Millions locked in rates below 4% during the refinancing boom of 2020–2021, making the idea of moving seem financially impossible. Yet despite today’s higher interest rates, more homeowners are choosing to sell anyway. Why are so many giving up their low mortgage rate—and what does it mean for today’s housing market?

The “Rate Lock” Effect—and Why It’s Fading

The rate lock effect refers to homeowners staying put to avoid trading a low mortgage rate for a much higher one. While this effect slowed housing inventory in recent years, it’s beginning to loosen.

Life, it turns out, doesn’t always wait for better interest rates.

Life Changes Are Driving Decisions

One of the biggest reasons homeowners are letting go of low rates is simple: life happens. Common triggers include:

• Growing families needing more space

• Empty nesters downsizing

• Job relocations or remote-work flexibility

• Divorce, marriage, or caring for aging parents

When a home no longer fits lifestyle needs, the benefit of a low rate can be outweighed by the cost of staying.

Home Equity Has Become a Powerful Incentive

Homeowners who bought or refinanced at low rates have often gained significant equity due to years of price appreciation. That equity can:

• Reduce the size of a new mortgage

• Offset higher interest rates with a larger down payment

• Help buyers purchase their next home with cash or minimal financing

For many sellers, the equity they've built makes moving financially feasible—even at today’s rates.

Rising Costs of Staying Put

Holding onto a low mortgage rate doesn’t mean your housing costs stay low forever. Many homeowners are facing:

• Higher property taxes

• Rising insurance premiums

• Increased maintenance and repair costs

• Expensive renovations to adapt an older home

In some cases, selling and buying a more efficient or better-suited home can make better long-term financial sense.

Creative Financing Is Making Moves Possible

Today’s buyers and sellers are also using alternative financing strategies to soften the impact of higher rates, such as:

• Adjustable-rate mortgages (ARMs)

• Temporary or permanent rate buydowns

• Assuming an existing mortgage (where allowed)

• Buying smaller or more efficient homes

These options give homeowners flexibility they didn’t have in previous rate cycles.

Lifestyle Value Is Outweighing Rate Anxiety

For many homeowners, quality of life now matters more than interest rate math. Proximity to family, shorter commutes, better school districts, or access to walkable communities are motivating moves—even if it means giving up a sub-4% mortgage.

In today’s market, emotional ROI is playing a bigger role alongside financial ROI.

What This Means for the Housing Market

As more homeowners decide to move despite higher rates:

• Inventory is slowly increasing

• Buyers have more options than in previous years

• The market is becoming more balanced

• Price growth is stabilizing rather than surging

This shift is helping unlock homes that were previously “frozen” by rate lock.

A Low Rate Isn’t Everything

While a low mortgage rate is valuable, it’s only one piece of the homeownership puzzle. As priorities shift and equity grows, more homeowners are realizing that staying put at all costs isn’t always the smartest—or happiest—choice.

In today’s evolving real estate market, flexibility, lifestyle alignment, and long-term planning are proving just as important as the interest rate on paper.

Matt Witte strives to be the best realtor in North Andover, MA.

Any questions about real estate, reach out to Matt Witte, North Andover Realtor, MA