The Price of Moving
Moving now costs the average US homeowner about $335 more a month, just to refinance what they still owe at today's rates, per The Economist.
That is the cost of trading a cheap old mortgage for a new one at 7.4 percent, with the same balance and the same remaining term. Nothing about the house changes. Only the rate does.
By income, the extra monthly cost runs:
Poorest 20%: about $60 a month
Middle 20%: about $260
Richest 20%: about $560
The Middle Feels It Most
But the middle class feels it most: the extra cost eats about 4.4 percent of income for the middle 20 percent, versus about 2.6 percent for the richest.
That arithmetic is the engine of the housing lock-in. Owners holding pandemic-era rates below 4 percent face a monthly penalty for moving that no amount of wanting a bigger house or a new city easily overcomes, so they stay, listings stay thin, and the market clears at low volume and stubborn prices. The Economist's numbers put a per-month price on the immobility.
Options and Market Impact
The lock-in runs through the mortgage originators Rocket and UWM Holdings, whose volumes depend on owners deciding the penalty is worth paying, and through the builders Lennar and D.R. Horton, who keep benefiting from the shortage of existing homes for sale.
Watch the average 30-year rate against the 7.4 percent in this analysis. Every sustained move down shrinks the $335 penalty and loosens the lock-in; every move up welds it shut.
Bottom Line
Per The Economist, refinancing the same balance at today's 7.4 percent costs the average homeowner about $335 more a month, and 4.4 percent of income for the middle fifth of earners. That is why nobody is moving.
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