Mortgage Lock-In Effect Exacerbating Housing Affordability 

The mortgage rate lock-in effect is exacerbating housing affordability challenges. Median home prices have risen to $419,000 in May, up from $270,000 pre-pandemic. Two thirds of outstanding U.S. mortgages have an interest rate below 4%, dissuading owners from selling their home. The rate lock-in effect could complicate the Fed’s goal to bring inflation to a 2% target, as borrowers who are locked into low-rate mortgages can afford to spend elsewhere, illustrating resilient consumer spending.  

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