US Housing: The Lock-In Factor Is Reshaping the Mortgage Market

The US housing market continues to be reshaped by the mortgage “lock-in” effect, with nearly 80% of outstanding US mortgages carrying rates below 5% versus current mortgage rates of ~6.3%, discouraging homeowners from selling or refinancing. Existing-home sales remain below pre-pandemic averages, while constrained resale inventory has shifted demand toward new homes, with builders now accounting for higher inventory. Although this dynamic has supported home prices, refinance activity remains below 2021 peaks, pressuring mortgage banking revenues and loan growth. The environment increasingly favors scaled homebuilders, mortgage servicers, and banks with strong purchase-mortgage and home-equity franchises, while exposing refinance-dependent lenders and regional banks to slower growth, duration risk, and weaker housing-related fee pools.