Household mobility and mortgage rate lock

Jack Liebersohn and Jesse Rothstein

Journal of Financial Economics, 2025, vol. 164, issue C

Abstract: Rising interest rates can create “mortgage rate lock” for homeowners with fixed rate mortgages, who can hold onto their low rates as long as they stay in their homes but would have to take on new mortgages with higher rates if they moved. We show mobility rates fell in 2022 and 2023 for homeowners with mortgages, as market rates rose. We observe both absolute declines and declines relative to homeowners without mortgages, who are unaffected by mortgage rate lock. Mobility declines are not explained by changes in home values. Overall, our estimates imply that rising interest rates reduced mobility in 2022 and 2023 for households with mortgages by 16% and caused $20bn of deadweight loss.

Keywords: Mortgages; Mobility; Interest rates; Housing lock (search for similar items in EconPapers)
JEL-codes: G21 G51 J61 R21 R23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:164:y:2025:i:c:s0304405x2400196x

DOI: 10.1016/j.jfineco.2024.103973

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