Something just flipped in the U.S. mortgage market—and it’s not rates coming down

The housing market just crossed an important threshold—one that’s especially good news for anyone who might be planning on buying a home any time soon.

The massive wave of COVID-19-era mortgages with ultra-low rates were a huge boon for many homebuyers, but the housing market hasn’t been the same since. A huge swath of homeowners in the U.S. suddenly had mortgage interest rates well below 4%—and very little incentive to sell their homes for less affordable options with today’s higher rates.

That dilemma has created a nightmarish scenario for the U.S. housing market. Many potential buyers and aspiring first-time homeowners remain priced out due to high home prices and higher interest rates. With more homeowners staying put whether they want to or not, housing inventory dried up considerably, shrinking the pool of options for home shoppers.

That’s beginning to change. According to new data from Realtor.com, the share of U.S. homeowners with mortgage rates over 6% is now greater than the share hanging onto those “ultra low” sub-3% rates. In the third quarter of 2025, 21% of outstanding mortgages carried a rate above 6% compared to the 20% of mortgages with rates below 3%. That change signals a “meaningful shift” from the gridlock that’s defined the last few years in the U.S. housing market.

“Mortgage rates above 6% now represent a larger share of outstanding loans than the ultra-low rates that defined the pandemic-era housing boom,” Realtor.com Chief Economist Danielle Hale said in a press release. “This crossover reflects a gradual resetting as some households trade in low-rate mortgages for higher-rate loans or enter the market for the first time, even as rate lock-in continues to limit the pace of inventory recovery.”

Lasting impact of low rates and lock-in

Those ultra-low rates are on their way out, but many homeowners still have rates well below what they’d be offered today. According to the new data, over 50% of mortgages still have rates at or below 4% and almost 70% have rates of 5% or lower. As long as that remains the case, the average homeowner might see their monthly mortgage payment spike by as much as $1,000 if they sold their home and took on a mortgage with today’s rates.

Still, the new mortgage data is a promising sign. Rates are very unlikely to get as low as they did during the early days of COVID-19 again in our lifetimes—particularly now that we know just what a lasting disruptive impact the low rate homebuying frenzy had on the market at large. The period between July 2020 and September 2021 is the only time that the U.S. 30-year fixed mortgage rate has gone below 3% since those records began being kept in the early 1970s. 

The high cost of buying a home is more salt in the wound for many Americans, who have seen the price of everything from groceries to used cars soar in recent years. With little relief in 2025, the unaffordability crisis seems to be on everyone’s mind lately. If interest rates settle down and the present trends continue, at least the housing market might be getting back to something a little closer to normal this year.

“Even with rates still elevated, modest mortgage rate decreases into the low-6% range could encourage additional home buying activity,” Hale said. “Further easing in inflation and mortgage rates would be key to unlocking more seller participation, helping to relieve price pressure and competition in an under-supplied market.”