{"id":186531,"date":"2026-01-16T13:25:08","date_gmt":"2026-01-16T20:25:08","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=186531"},"modified":"2026-01-16T13:28:08","modified_gmt":"2026-01-16T20:28:08","slug":"more-americans-have-mortgage-rates-above-6-percent-than-3-percent","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/more-americans-have-mortgage-rates-above-6-percent-than-3-percent","title":{"rendered":"A Key Stat Just Crossed a Major Milestone\u2014And It Could Have a Major Impact on the Housing Market"},"content":{"rendered":"\n

America\u2019s tipping point for small investors might come not from a sudden drop in interest rates or a deluge of new construction<\/span>, but from<\/span> something far simpler: For the first time in many years, more homeowners carry mortgage rates at or above 6% than enjoy 3% loans.<\/span><\/p>\n\n\n\n

It marks a shift that will finally loosen the \u201crate-lock\u201d grip on the housing market, which has kept potential sellers from listing their homes for fear of losing their low rate. The lack of inventory, fueled by too few listings, has been one of the biggest hurdles that investors and <\/span>flippers<\/span><\/a> have had to overcome since the Federal Reserve raised interest rates after the pandemic.<\/span><\/p>\n\n\n\n

The all-important shift from lower to higher loan rates among mortgage holders happened at the tail end of 2025, according to <\/span>MarketWatch<\/span><\/a>, as an increasing number of buyers bit the bullet and purchased homes at 6%+ interest rates, leaving fewer homeowners with sub-3% interest rates originated during 2020-2021.<\/span><\/p>\n\n\n\n

With homeowners forced to surrender or walk away from their sub-3% loans, the likelihood of an influx of properties onto the market and more opportunities for investors has become far greater than in recent years.<\/span><\/p>\n\n\n\n

A Numbers Game<\/span><\/h2>\n\n\n\n

America is still chronically undersupplied with housing, according to <\/span>Goldman Sachs<\/span><\/a> research, which puts the shortfall at about 4 million homes beyond <\/span>normal<\/span> construction. While President Trump has recently made efforts to stimulate the real estate market through a <\/span>ban on institutional investors buying single-family homes<\/span><\/a> and by <\/span>tasking Fannie Mae and Freddie Mac with buying $200 billion in mortgage-backed securities<\/span><\/a>, neither initiative addressed the real issue in the housing market: supply. The end of the rate-lock effect could significantly change that dynamic.<\/span><\/p>\n\n\n\n

Affordable Markets Plus Increased Supply Equal More Deals<\/span><\/h2>\n\n\n\n

The lapse in the rate lock stranglehold on inventory supply is likely to have its most profound effect on investors in generally lower-priced markets, where <\/span>affordability<\/span><\/a> and <\/span>cash flow<\/span><\/a> come into play.  <\/span><\/p>\n\n\n\n

This<\/span> shows in the data. States with modest home values, such as <\/span>Mississippi, Oklahoma, and West Virginia<\/span><\/a>, now have the <\/span>greatest<\/span> proportion of homeowners willing to take on 6%-plus mortgages, reflecting lower monthly payments and more flexibility for owners who wish to move or trade up. Mississippi’s average home value of <\/span>$186,000, according to Zillow<\/span><\/a>, lowered the state’s homeownership rate because homeowners took out mortgages at 6% or higher.<\/span><\/p>\n\n\n\n

Robert Dietz, National Association of Home Builders chief economist, told <\/span>NAR Realtor News<\/span><\/a>:<\/span><\/p>\n\n\n\n

\u201cOne of the trends we\u2019re keeping a close eye on for 2026 is geography. We\u2019ve seen new-home markets slow down in previously hot markets like Texas and Florida, in part because of some limited cyclical overbuilding and the fact that mortgage rates remained above 6% in 2025. <\/span>But <\/span>there are also<\/span> pockets of strength emerging, particularly in the Midwest.<\/span> Markets like Columbus, Ohio; Indianapolis; and Kansas City\u2014areas that have long been more affordable and are close to major universities\u2014are showing outsized growth.\u201d<\/span><\/em><\/p>\n\n\n\n

The End of the Rate-Lock Era Needs to Coincide With More Inventory<\/span><\/h2>\n\n\n\n

While ending the rate-lock era may bring more houses to market, it won\u2019t increase overall inventory in the U.S. housing market, which needs to <\/span>increase<\/span> as rates come down and buyers feel more comfortable about the economy, to truly have a meaningful effect on affordability. That said, a loosening market is a prime opportunity for investors with cash to get involved on the first floor, anticipating an increased thaw.<\/span><\/p>\n\n\n\n

Here are some steps that investors can take now.<\/span><\/p>\n\n\n\n

1. Don\u2019t wait for \u201ccheap money.\u201d It may never come. <\/span><\/h3>\n\n\n\n

Underwrite today\u2019s rates for 5.75% to 6.5% in long-term debt. Stress-test deals at Prime + 1% to ensure resilience. Let the past go and focus on cash flow or near-neutral assets rather than appreciation, so you can hold the asset long term, when appreciation will eventually kick in.<\/span><\/p>\n\n\n\n

2. Target markets where people are moving<\/span><\/h3>\n\n\n\n

Being a landlord in a low-demand market is not a good move. By targeting affordable markets where people are also moving, such as secondary and tertiary markets in the <\/span>Midwest and parts of the South,<\/span><\/a> you can ensure both rental demand and either cash flow or, at worst, an investment that pays for itself, allowing you to benefit from <\/span>tax benefits<\/span><\/a>, appreciation, and tenant paydown. Targeting markets with rising inventory but flat pricing will give you room to negotiate.<\/span><\/p>\n\n\n\n

3. Negotiate like it\u2019s 2018<\/span><\/h3>\n\n\n\n

With more sellers than buyers in many markets, negotiating a good deal when you buy rather than when you sell is paramount to making cash flow work. <\/span>This<\/span> means:<\/span><\/p>\n\n\n\n