What once might have felt like a financial win when it came to buying or refinancing a home could now be acting like a pair of “golden handcuffs,” according to a survey by Calgary Homes, a Canadian real estate platform that polled 3,002 Maine homeowners.
According to the survey, ultra-low 30-year fixed mortgage that were available in past years are today almost impossible to replace due to mortgage rates that are far higher than pandemic-era lows.
The survey found that 31% of respondents who want to sell are unwilling to do so because they want to hold onto the lower rate they secured previously, resulting in a “mortgage lock-in effect” or “golden handcuffs.”
If existing homeowners want to sell and move, they must give up their low monthly payment. Or they stay put, even if their current home no longer fits their life.
Delayed life decisions
The research looked at how many homeowners would like to sell, downsize, relocate or buy a more suitable home, but are choosing not to because they do not want to give up their existing mortgage rate.
When Maine homeowners were asked whether they had delayed a major life decision because they did not want to give up their current mortgage rate, 35% said they had. The most common life decision that was delayed was moving closer to family, cited by 11% of respondents. Other delayed decisions included moving to a more affordable area, downsizing for retirement and upgrading to a larger home.
Other results
- 32% said they feel comfortable staying where they are.
- 17% said they feel lucky to have their current mortgage rate.
- 11% said they feel frustrated that moving is so expensive.
- 9% said they feel financially trapped by their mortgage rate.
- 8% said they feel stuck in a home that no longer fits their life.
- 7% said they are actively planning to move anyway.
- 16% selected none of the above.
Downsizing
When asked whether they had delayed downsizing because moving would mean taking on a worse mortgage deal, 26% said yes.
Asked if they would accept a worse quality of life to keep their current mortgage rate, 15% said yes.
“Low mortgage rates were once seen as a major win for homeowners, but for some, they have become a quiet constraint,” said a Calgary Homes spokesperson. “Many homeowners may be sitting on a great rate, but not necessarily in a home that still works for them.”
