By Coldwell Banker Riviera Realty

For years, U.S. housing has been stuck in the grip of a phenomenon economists call the mortgage rate lock-in effect. That’s when homeowners who locked in ultra-low pandemic rates — often around 3% — stayed put rather than sell, because moving meant trading inexpensive financing for much higher costs. But recent data suggest that dynamic is fading, and that shift could reshape the market in 2026. Fox Business

Why This Turning Point Matters

Until recently, a large share of American homeowners were holding mortgages secured during the era of historically low rates. Many had refinanced to rates below 3%, creating a powerful incentive to stay in place. Those low-rate loans helped prop up prices by limiting housing supply: fewer listings made competition for homes fierce, even as affordability deteriorated.

That long-standing imbalance is now shifting. For the first time since the pandemic era began, more homeowners nationally now carry mortgages above 6% than under 3%. That crossover matters because it chips away at the financial benefit of staying put — and could prompt more sellers to finally list their homes.   Longbridge SG

The Lock-In Effect Is Weakening

Recent reports show:

• The proportion of mortgages above 6% has overtaken the share below 3%, signaling a structural change in how debt is distributed among homeowners.  BAM
• Experts say the fading of the lock-in effect could gradually unlock inventory — meaning more homes for sale — which might help ease some affordability pressures. Steadfastmortgage.com
• Persistent mortgage rates in the 6% range — lower than last year’s peaks but still elevated — continue to make buyers cautious, but the psychological barrier of “giving up a great low rate” is diminishing.  Moringstar

This turning point doesn’t happen overnight, and its effects will take time to ripple through the market. But for buyers and sellers alike, it’s a critical inflection point after years of unusual market conditions.

What Other Housing Market Coverage Is Saying

This trend toward loosening lock-in effects and shifting affordability is showing up across multiple credible sources:

• Business Journal Daily notes that the shift reflects the broader end of the rate-lock era, which kept many existing homeowners from moving. Business Journal…
• Fortune and other outlets point out that the fading lock-in effect could change buyer and seller behavior, with more movement expected as incentives to stay with old loans weaken.  Fortune
• Broader housing commentary highlights transitioning market forces — from inventory improvements to moderation in price increases — that many economists view as signs of a maturing cycle rather than a collapse.   HousingWire

Meanwhile, median home sales and affordability data from other recent reports show that:

• Home sales are still low compared with historical norms, but there are early signs of pickup as rates ease.   Baron’s
• Mortgage rates have eased slightly from recent highs, bringing some relief for prospective buyers, though they remain above historic lows.  AP News
• Local reports indicate pockets of rising affordability, especially in some Midwestern and Southern metro areas.  Axios

What Buyers and Sellers Should Watch in 2026

This evolving market presents both opportunities and caution:

• For buyers: Improved inventory could mean less competition and more choice — but affordability will still vary widely by region.
• For sellers: With fewer ultra-low mortgage holders dominating the market, more homeowners may feel comfortable listing in 2026 — potentially leading to a more balanced buyer-seller dynamic.
• For policymakers and economists: These shifts are worth watching as they might influence pricing, construction activity, and broader economic trends throughout the year.

In summary: The housing market isn’t reverting to pre-pandemic normal overnight, but the fading dominance of ultra-low mortgage rates — and the gradual weakening of the mortgage lock-in effect — represent a noteworthy turning point. That could unlock inventory, alleviate some affordability stress, and redefine how buyers and sellers engage with the market in 2026.