65.6% of Mortgages Are Below 5%, but the Lock-In Is Slowly Breaking

Right now, nearly two-thirds of outstanding mortgages in the U.S. (65.6%) carry a rate below 5%. 

That’s the leading takeaway from Realtor.com’s Q2 2026 Outstanding Mortgage Data report. The lock-in effect is alive and well for both buyers and homeowners in your market and rate comparisons will likely come up in the conversation, even with those ready to make a move. 

Rates are back up above 7% and are currently hovering around 7.4%, so your would-be sellers are doing the math and seeing the impact of those higher rates on their next home purchase. 

The result? Those who don’t have to move yet are inclined to wait for rates to drop. Significantly. 

Same for buyers, who are looking at how a 7.4% rate has slashed their purchasing power, or increased the monthly payment on houses that check all the boxes. 

Here’s what the data is showing and what it means for your conversations right now. 

Where Outstanding Mortgage Rates Stand in Q2 2026

Realtor.com’s report sorts every outstanding mortgage by the rate the owner got when the loan was made. The numbers come from the FHFA National Mortgage Database and are based on loan count.

Here’s how rates break down as of the second quarter:

• Under 3%: 19.2%
• 3% to 4%: 29.9%
• 4% to 5%: 16.5%
• 5% to 6%: 12.0%
• 6% or higher: 22.5%

Add up the first three groups and you get 65.6% of mortgages with a rate below 5%. Close to half (49.1%) are below 4%, and 77.6% are below 6%.

The numbers held close to where they were in the first quarter, but there has been a slight decline in the share of mortgages below 5%. Here’s how each group changed:

• Under 3%: down 0.1 percentage point
• 3% to 4%: down 0.2 percentage point
• 4% to 5%: down 0.1 percentage point
• 5% to 6%: up 0.2 percentage point
• 6% or higher: up 0.3 percentage point, the biggest move of the group

Compared with Q2 2025, the 6% or higher group is up 2.3 percentage points.

The under-3% group peaked at around 24.6% in early 2022. Those rates came from a rare window. Freddie Mac’s 30-year fixed rate dipped below 3% in July 2020 and stayed below that line for most of the stretch through September 2021. 

It’s the only time rates have fallen that low since 1971.

Hannah Jones, senior economist at Realtor.com, explained why those low-rate loans keep so many homeowners in place.

“A mortgage rate below 3% was an extraordinary exception, not a new normal. In data going back to 1971, rates fell below that mark only during the pandemic-era window and homeowners are still making decisions around those unusually low rates today. The rate unlock is real, but it’s slow, as low-rate loans gradually age out, are traded up or paid off.”

The Pandemic-Era Loan Group Hits a Record

The report also sorts mortgages by age, counting from the date each loan was made. For a refinanced loan, the clock starts on the refinance date.

Here’s the breakdown by loan age:

• 4 years or less (originated July 2022 to June 2026): 27.8%
• 4 to 7 years (July 2019 to June 2022): 42.8%
• 7 to 10 years (July 2016 to June 2019): 9.2%
• More than 10 years (before July 2016): 20.2%

The 4-to-7-year group hit a record high in Q2, up from 40.8% in the first quarter. These are the loans homeowners took out or refinanced during the pandemic, when rates sat at record lows. 

The group has now passed the newer-loan group, which used to make up the largest share.

Loans less than four years old accounted for about 6 in 10 mortgages in 2023. Today, fewer than 3 in 10 fall into that category.

Many owners in the pandemic-era group locked in rock-bottom rates. According to Realtor.com’s data, they have no natural point in sight to move or pay off their loans.

The report says the movement out of low-rate loans comes mostly from two groups:

• “Swappers,” or owners who trade a lower-rate loan for a higher one when they buy their next home
• Owners who pay off their mortgage

Where the 6%+ Share Could Be by Mid-2027

Realtor.com expects mortgage rates to stay elevated over the next year, so the vast majority of new loans would carry a rate of 6% or higher. 

Under that outlook, the 6% or higher group could grow from 22.5% to between 27% and 28.5% by mid-2027. It would be the highest share in more than a decade.

The forecast assumes 3.1 million new loans over the next year, which matches 2025 home purchase originations, with no refinances. 

From there, Realtor.com looked at two possible paths:

• Net-new case: No existing mortgages get paid off. The total number of loans grows, and lower-rate loans make up a smaller portion of a bigger pool.
• Replacement case: Every new loan pays off an existing loan under 6%. The total stays flat, and the number of lower-rate loans goes down.

The report expects the real outcome to fall between the two. In the replacement case, loans at 6% or higher would pass the 3% to 4% group and become the single largest rate group.

Low-rate loans would keep a big share of the market either way. A year from now, the report estimates:

• Around 72% to 73% of mortgages would carry a rate below 6% (down from 77.6%).
• Around 45% to 46% would carry a rate below 4% (down from 49.1%)
• The 3% to 3.99% group would see the biggest drop of any group, losing 1.7 to 2.3 percentage points

Rates could change the outlook. If they fall below 6%, the report says more new loans would go into the 5% to 6% group. The climb in the 6% or higher group would slow, and trading up would cost homeowners less.

What This Means for Your Seller Conversations

With close to two-thirds of mortgage holders under 5%, a new loan would cost a large share of your potential sellers more than the one they have. 

According to Realtor.com’s report, that higher cost makes a move harder to justify without a pressing need.

Seller expectations may be adjusting, though. Home listing prices fell 1.4% in September and active listings edged higher, which the report reads as sellers adapting to market conditions.

Jones explained what keeps sellers moving and what could bring more of them to market.

“Even in today’s high-price, high-rate market, homebuying activity around major life events, such as having kids, a job change, or a divorce, keeps the market in motion. Easing inflation and lower mortgage rates should also bring more sellers off the sidelines, adding inventory which relieves price pressure and competition in today’s under-supplied market. However, the recent surge in mortgage rates has pushed expectations of recovery further afield.”

Here’s what you can do now to help your sellers prepare: 

• Ask what’s changing in their lives. A growing family or a new job can make a move make sense whatever rate they’re holding.
• Put their rate in context. Rates under 3% happened once in data going back to 1971, so a seller waiting for those rates to come back could be waiting a very long time.
• Find their number. Ask sellers what rate or monthly payment would make a move work for them, so you can reach out when rates get close.
• Walk through the trade-up. Swappers are part of what’s keeping the market moving, and a side-by-side look at their current payment and a new one helps sellers decide with real numbers in front of them.
• Set pricing expectations early. Use the September dip in listing prices to ground the first pricing conversation in what the market will bear.

What This Means for Your Buyer Conversations

Rates surged to 7.4%, according to the report, and the higher cost has eaten into what buyers can afford. The report ties the climb to a pullback in buyer demand and a slowdown in the housing market.

The September drop in listing prices and the uptick in active listings give your buyers a little more breathing room. 

Here’s how you can use this data to support your buyers:

• Set rate expectations up front. Under the report’s outlook, the vast majority of buyers who take out a mortgage in the next year will get a rate of 6% or higher, so build budgets around that.
• Explain why inventory feels tight. Owners holding on to low-rate loans are one reason fewer homes come to market, and buyers who understand that are better prepared for the search.
• Point to the room they have. Softer listing prices and more active listings can give buyers more to choose from and more space to negotiate.
• Keep them posted on rates. If rates fall below 6%, new loans would move into the 5% to 6% group, and buyers will want to know when that changes their budget.
• Research and share options that lower their rate or monthly payment. Look into rate buy-downs, down payment assistance, loan options that carry a lower rate, etc.

If more sellers come off the sidelines, as Jones expects, the added inventory would take some pressure off prices and competition.

Under the report’s outlook, the vast majority of buyers who take out a mortgage in the next year will get a rate of 6% or higher.

Realtor.com calls the unlock real and slow, with low-rate loans fading as owners trade up or pay off their mortgages. The pace depends on home sales and rates, as well as inflation, which to an extent rely on the U.S. government’s next steps towards Iran. 

For now, the 6% mark is the number to watch in the next few quarters of data.