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Household Mobility and Mortgage Rate Lock

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  • Jack Liebersohn
  • Jesse Rothstein

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 $20 billion of deadweight loss.

Suggested Citation

  • Jack Liebersohn & Jesse Rothstein, 2024. "Household Mobility and Mortgage Rate Lock," NBER Working Papers 32781, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32781
    Note: CF LS
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    More about this item

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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