California Policy Lab

Rising interest rates can create "interest 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 2022-2023 for homeowners with mortgages, as market rates rose. There were no such declines for homeowners without mortgages or for renters, and the decline is not explained by changes in home values. Overall, our estimates imply that rising interest rates reduced mobility by 15% for households with mortgages.

This work has been supported, in part, by the University of California Multicampus Research Programs and Initiatives grants MRP-19-600774 and M21PR3278