BAM Key Details: 

  • New Zillow research highlights the generations and metros least (and most) impacted by changes in mortgage rates. 
  • Boomer homeowners and those living in less expensive metros are least deterred by the lock-in effect of high interest rates, with Pittsburgh boomer homeowners in the lead.

New research from Zillow® shows older homeowners and those living in less expensive metros are least likely to be deterred from moving by high mortgage rates. 

Put simply, these groups are least likely to suffer from the lock-in effect. For one, boomers and Silent Generation homeowners are more likely to be mortgage debt-free—meaning more disposable income to save for things like a down payment—with a tidy sum of equity they can apply toward a new home purchase. 

Homeowners in metros with a lower cost of living are also better positioned to save more of their income to put toward the cost of moving to a more suitable home. 

And according to Zillow’s research, boomers living in Pittsburgh are least likely to be fazed by mortgage rate spikes or to feel “locked in” by their lower mortgage rates. 

Read on for more of the highlights. 

13% of homeowners are immune to the effects of high mortgage rates

Roughly 10.8 million homeowners across the U.S. should be immune to the “lock-in effect” of high interest rates. 

Many of today’s homeowners have mortgage rates well below the current average rate for a 30-year fixed-rate mortgage. That’s where the “lock-in effect” comes in. 

But for some homeowners, changes (and specifically increases) in mortgage rates have little if any effect on their decision to move. 

Census data shows 10.8 million U.S. homeowners (13%) are both mortgage debt-free and earning a high enough income to afford monthly payments on a typical home in their area if they bought a home today. 

These homeowners are likely to be older—specifically boomers and Silent Generation—and/or living in relatively affordable markets. 


Source: Zillow

In fact, almost 38% of boomer homeowners living in Pittsburg are completely rate-lock free, making them the homeowner generation least affected by interest rate changes in the 50 largest U.S. metros. 


Source: Zillow

The so-called mortgage rate lock-in effect has seriously curtailed both home sales and inventory over the past two years. Homeowners are more free to sell in less expensive areas — bringing more resale inventory into the market and facilitating sales. Massive appreciation has left homeowners with record levels of equity, and many are financially able to move on, even given today’s higher rates.

Orphe Divounguy

Zillow senior economist

New listings are up in metros with higher shares of mortgage rate immune homeowners

Markets with higher shares of homeowners free from the lock-in effect are seeing more new listings, giving buyers more options during a prolonged inventory shortage. 

Rate lock is easing most in these markets and has shown signs of general easing over the past few months. But the flow of new listings is still well below pre-pandemic rates. And total inventory is still down roughly 37% from 2019 levels.

The drastic shifts in mortgage rates are behind many homeowners’ decisions to “wait it out.” Rates plunged to record lows in 2020 and 2021, doubled in 2022, soared to 23-year highs in 2023, and have hovered around 7% ever since, give or take half a percentage point. 

According to research from the Federal Housing Finance Agency, mortgage rate-lock prevented around 1.33 million home sales between the second quarter of 2022 and the end of 2023. 

Homeowners in relatively affordable markets often have less mortgage debt and face lower barriers to entry for their next home purchase, with or without taking on a new mortgage. 

The share of homeowners free of rate lock is at its highest in relatively affordable markets in the Upper Midwest, with Pittsburgh, Buffalo, and Cleveland leading the way. Buffalo and Cleveland are both among Zillow’s Hottest Markets for 2024

Homeowners in the least affordable markets generally find it more difficult to give up a low mortgage rate and more expensive to buy a new home in their area. So, these markets tend to have fewer new listings coming on the market. 


Source: Zillow

Zillow’s research shows a clear positive correlation between the share of homeowners who are mortgage debt-free and the change in new listings since early 2022 when interest rates soared. 

Metros with higher shares of homeowners deterred by the lock-in effect had larger declines in new listings. 


Source: Zillow

It’s worth noting here that homeowners move for many reasons aside from a lack of mortgage debt or having a sufficient income to absorb the cost of buying and moving into a new home: 

  • Major life events
  • Changes in family size
  • Job changes

That said, housing affordability is an important factor for many, which is why metros with higher shares of homeowners free from the lock-in effect are seeing more new listings compared to metros with higher shares of locked-in homeowners. 

So, while the share of households relocating has declined, relatively affordable markets are seeing a smaller decrease in homeowner mobility. 

Older generations intent on moving are less inhibited by high interest rates

Boomer homeowners are the least likely to be affected by rate lock, while millennial and Gen Z homeowners are significantly more vulnerable to it. For one, older homeowners generally have more equity to draw from. 

Also, on average, boomers have the highest incomes among current generations of homeowners. 

Put together, higher wealth and higher incomes make it easier for older homeowners to make an all-cash home purchase or make a larger down payment on their next home, diminishing the impact of high mortgage rates. 

Nationwide, about one in six baby boomer homeowners (17%) are free from the lock-in effect of high interest rates, compared to 6% of millennial homeowners and 12% of Gen X homeowners. 

Over the past few years, homeowners have benefited from a 41% increase in home values over the course of the pandemic. Those now thinking of cashing out and moving on have more options to choose from when it comes to both selling their current home and buying their next. 

Byron Lazine broke down the Zillow report this week on the Hot Sheet

On a related note, in the next day’s Hot Sheet, Byron reviewed a new Redfin report showing more than three-quarters of boomer homeowners are hoping to stay put as they grow older. 

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