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Mortgages

Mortgage Rates

1 in 5 Homeowners Are Now Paying Mortgage Rates of 6% or Higher

By: Adam Hardy

Editor: Katherine Peach

Published: Oct 1, 2025 11:07 a.m. EDT 5 min read

Photo-illustration of a couple being trapped by a house

Money; Getty Images

The share of U.S. homeowners with a mortgage rate of at least 6% is now at the highest level in a decade.

About 1 in 5 homeowners had loans with interest rates of 6% or higher between the months of April and June, according to a new analysis by Redfin. That’s a stark increase from the low rates of the pandemic era, when as few as 7.3% of homeowners in 2022 had mortgage rates that high.

For better or worse: “Americans are slowly growing accustomed to elevated mortgage rates,” the report says.

Money’s daily survey shows mortgage rates for a 30-year fixed-rate loan are currently 6.53%. Rates have been stuck above 6% since late 2022, triggering a so-called “lock-in effect,” where homeowners with low rates largely avoided moving so they could keep their rate.

Redfin’s report suggests the lock-in effect could be starting to thaw — and that’s largely good news for homebuyers.

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“More homeowners are deciding it’s worth moving even if it means giving up a lower mortgage rate,” Chen Zhao, Redfin’s head of economic research, says in the report. “As a result, more homes are hitting the market than we’ve seen in years, giving buyers a wider range of choices.”

While prolonged and elevated mortgage rates are a drag on the housing market, more inventory can help lower home prices and improve affordability.

At the end of August, the typical sales price for a home was $366,806 after edging down three consecutive months, according to Zillow data. Estimated monthly mortgage payments were also down to $1,855, the lowest point this year.

Yet it’s not time to celebrate, as many homeowners are staying put — and many potential buyers are still priced out.

“Fewer borrowers are locked in, but the effect is fairly marginal,” Laurie Goodman, founder of Urban Institute’s Housing Finance Policy Center, tells Money. “Remember, there are a lot of borrowers out there with very low rates.”

For instance, as of July, 83% of homeowners have a rate of 6% or below, according to mortgage data that Urban shared with Money. And nearly a quarter of homeowners still have rates of 3% or below.

Goodman says that until rates dip into the 5.8% range, she expects mortgage activity to “remain muted.”

When will mortgage rates fall?

According to a 2024 Realtor.com report, approximately one-third of potential homebuyers are waiting for rates to drop below 5%. That may be a long time off.

While the Federal Reserve did deliver its first of potentially several interest rate cuts earlier this month, the reduction of the federal funds rate doesn’t directly move the needle on mortgage rates. (Mortgage rates actually increased following the Fed interest rate cut.)

Instead, mortgage rates largely track the 10-year Treasury bond yield, which is the interest rate the government pays to borrow money for a decade. This metric also serves as a benchmark for how investors are feeling about inflation and economic growth.

Because inflation is remaining stubborn, housing market economists are expecting mortgage rates to stay above 6% for the rest of 2025. If inflation picks up for September, rates may even rise before coming back down.

According to Redfin, mortgage rates are expected to stay between 6% and 7% for the next 12 months. Meanwhile, Fannie Mae projects mortgage rates won’t tick below 6% until the end of 2026.

For now, mortgage rates are at least down from their 2025 high of 7%, notched in January.

“Every drop in rates helps restore affordability,” Goodman says, “particularly combined with near-zero home price appreciation in many parts of the country.”

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