There are now many homeowners who want to move out of the starter house into a larger one, or smaller if they wish to contract since you are now an empty nester. But they are locked in the “golden handcuffs” of low mortgage rates and find it too daunting to sell their homes now that rates are so much higher.
Rates are now back to 2007 levels as September 29th 6.7% for a 30 year fixed. This is the highest level in more than 15 years.
My son currently is close to a 3% rate and has no future plans to move out of his starter home. But I expect that to change at the end of a future 9-month period, but at a great cost.
Think about it, a 30-year fixed on a $500,000 mortgage varies widely, a 3% has a monthly payment at $2,108.02; while a 6% would have a payment of $3,336.39.
So, there is a payment increase of $1,118.37 or practically a second mortgage payment on a smaller home.
The golden handcuffs will be in place for a while.