Homeowners with a mortgage interest rate of sub-4% are on the way and they buy newly built houses

A growing number of homeowners who were lucky to secure the mortgage interest rate of Sub-4% now chooses to give them up in exchange for the possibility of moving to brand new houses-even if it means it will have a higher rate.

From the end of September the mortgage interest rate above 6% will remain after months of gradual relaxation, so that a certain hope of hope for buyers is struggling with affordability problems.

In the meantime, homeowners kept sticking to the rates under the threshold of 6%, which are good for just over 80% of all outstanding mortgage debt in the US, “locked up”.

“Many potential borrowers feel ‘trapped’ because of their current rates, and to be honest, their affordability is often highly influenced by both rates and higher prices,” ” Sarah Defloriovice -president of mortgage banking on William Raveis Mortgagetells REALTOR.COM®.

However, a zoomed view of the Sub-6% Group reveals a more nuanced image, with some shifts within this segment.

Between the first and second quarter of 2025, the share of mortgages under the 3%return to historic COVID-19 Pandemic era broke LOS points of 20.7%to 20.4%, according to the latest report on outstanding debts of Realtor.com.

In particular, the next level of rates, between 3% and 4%, saw an even sharper decrease, shrinking from 32.7% to 32.1% for the same period.

Mortgages of 4% to 5% and 5% to 6% kept stable, respectively at 17.9% and 9.9%, while the share of mortgages above 6% was 0.9 percentage points of 19.9%.

The shrinking low range

So why did the share of the Sub-4% mortgage debt have decreased?

REALLTOR.COM SENIOR ECONIC Research Analyst Hannah Jones Explains that the downward shift in that category must at least partially do it with entrepreneurial construction companies.

“Builders offer stimuli such as tariff buying, which help some buyers to increase rates between 4% and 6%, so that that group remains stable,” she says. “As a result, fewer buyers have rates below 4%, while the share with rates above 6% continues to grow.”

Housing builders who want to drum and move part of their narrow inventory have increasingly offered a variety of incentives, such as cash when closing, including devices, upgrades and, perhaps the most considerable, buydowns.

A buydown is a cost paid in advance by the builder to lower the interest of a buyer, often before the entire loan period, resulting in lower monthly payments.

A half -point reduction can save buyers around $ 178 per month, or more than $ 2,000 a year, according to Jones.

Another way in which house builders have responded to current market conditions is by offering smaller, more affordable houses.

A homeowner with a mortgage interest rate below 4% – a level that has not been seen since March 2022 – would need a mandatory reason to move because this would mean that this would exclude a new mortgage at a considerably higher rate.

“Most owners will only move if they have to, slow down for as long as possible in the hope that the rates will fall,” says Jones.

Having the opportunity to buy a new built house with a spacious stimulus thanks to a builder seems to be such a compelling reason. Others include important events in life such as marriage, divorce and the birth of children.

Impact on the housing market

At the same time, the total housing market usually remains unchanged compared to the previous months: 80.3% of the outstanding mortgages are currently younger than 6% and 70.4% are less than 5%.

“Because most mortgage holders currently have rates below 6%, many homeowners are reluctant to move,” says Jones. “They would trade a more favorable interest for a less favorable.”

Over time, as newer mortgages build up at higher rates, a larger proportion of homeowners will bear the rates more than 6%.

“This dynamic keeps the range of houses tight and dampens sales, unless the mortgage interest rate decreases considerably to seduce more buying and sales activity,” adds the analyst.

In a good news, a recent study showed that 40% of the potential buyers would find a home purchase feasible if the mortgage interest would fall below 6%, and 32% of the buyers would be willing to jump on the market again if the rates fell below 5%.

“As soon as we see a persistent period with rates below 5%, there will be a lot of new inventory because people feel better about their purchasing power,” says Deflorio. “There is also a chance that an almost inventory can have a downward pressure on the prizes, which would also be a welcome relief for many.”

Economists of brokelaar.com expect that by the end of 2025 the share of the Sub-6% mortgages could fall nearly 75%. Or to say it differently, the number of mortgage holders with a rate of 6% or higher is likely to rise.