Explaining the U.S. housing market's "mortgage lock-in"
Episode Description
Wharton School professor Lu Liu explains what "mortgage lock-in" means for the U.S. housing market in the opening episode of our four-part Ripple Effect podcast series on real estate.
Homeowners are locked into their favorable low rates and don't want to sell and rebuy, forgoing their rates. Her advice for people on the housing hunt, waiting for rates to drop and inventory to pick up?
"It's very difficult to time exactly when rates come down. They may stay higher. That's been a surprise in the latest inflation news, and so you should make your decisions based on your personal circumstances."
----- The Wharton School of the University of Pennsylvania is committed to sharing its intellectual capital through Knowledge at Wharton, the school’s online business analysis journal.
Launched in 1999, Knowledge at Wharton offers free access to:
- Articles, podcasts, and videos highlighting Wharton faculty research and analysis of current business trends - Interviews with book authors from Wharton School Press - In-depth series of curated content like Wharton Executive Education’s Nano Tools for Leaders - A searchable database of more than 10,000 articles covering all aspects of business - A weekly newsletter that delivers Knowledge at Wharton insights directly to your inbox
Visit the Knowledge at Wharton homepage: https://whr.tn/3qUpSBE Subscribe to the Knowledge at Wharton YouTube channel: https://whr.tn/3DEAgAU
Brief Summary
Mortgage rate lock-in is causing a significant drop in US housing transactions.
Key points
- Mortgage Lock-In Effect. US mortgage borrowers are locked into lower rates, impacting housing market transactions.
- Dramatic Drop in Transactions. Housing transactions are down 30% compared to last year, reminiscent of the financial crisis.
