Explained · 8-minute video
Mortgage rates hit 7.3%. Why is nobody selling their house?
The average 30-year fixed mortgage rate in the US was 7.32% in the week of October 22, 2026 (Freddie Mac, Primary Mortgage Market Survey®). In January 2021 it was 2.65%. Millions of owners locked in those low rates, and that is changing how the housing market works.
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Why mortgage rates are this high
Mortgage rates follow a benchmark: the yield on the 10-year US Treasury. It was about 0.52% in August 2020 and reached 5.31% on October 5, 2026, the highest since 2002 (U.S. Treasury, Daily Treasury Par Yield Curve Rates). Mortgage rates usually sit about two percentage points above that yield. Since 1971 the average 30-year rate has been about 7.7%, and in 1981 it reached 18.6% (Freddie Mac; average: own calculation). So today’s level is roughly normal. The problem is the jump from record lows to normal in less than two years.
The payment shock
Take a $300,000 house bought in January 2021 with 20% down: a $240,000 loan at 2.65% costs about $967 a month in principal and interest. US home prices have risen about 42% since then (FHFA House Price Index), so the same house costs around $425,000 today. With 20% down, $340,000 at 7.32% costs about $2,336 a month, almost 2.4 times as much (own calculation). Average hourly pay rose about 26% over the same period (BLS). The payment took about 32 hours of average pay in January 2021 and takes about 62 hours today (own calculation).
The lock-in effect
There are about 51 million mortgages in the US. In the second quarter of 2026, 49% had a rate below 4%, about 19% were even below 3%, and only about 22.5% were at 6% or higher (FHFA, National Mortgage Database). The average rate on all existing mortgages was about 4.4%. An owner who sells and buys something similar gives up a cheap loan for a new one above 7%, so most people stay.
A frozen market, not a crash
US home prices hit a new record in July 2026 (FHFA). Unlike 2008, almost nobody is forced to sell: about 0.3% of mortgages are underwater today, against about 11% in early 2013, and about three out of four mortgages are at 60% or less of the home’s value (FHFA, National Mortgage Database). Builders are slowing down too. Housing starts ran at an annual rate of about 1.22 million in September 2026, down about 7% from 1.32 million a year earlier, and new homes for sale would last about 8.5 months at the August pace (U.S. Census Bureau).
Who pays
Owners with a cheap loan are not the ones who pay. First-time buyers face today’s prices and today’s rates at once. Renters stay renters longer; rent was up 2.8% from a year earlier in September 2026, after rising 8.8% a year in March 2023 (BLS, CPI-U). People who have to move for work or family swap a cheap loan for an expensive one.
The figures, updated daily: 10-year Treasury yield · Fed funds rate · US inflation rate
Related: Bond yields hit 5.31% · Loan calculator
Terms in the glossary: Interest rate · Federal Reserve (Fed) · Government bond · Inflation
Frequently asked questions
Why are mortgage rates so high in 2026?
They follow the 10-year Treasury yield, which rose from about 0.52% in 2020 to 5.31% in October 2026 (U.S. Treasury).
What is the mortgage lock-in effect?
Owners with old, cheap loans stay put because moving would mean a new loan at a much higher rate. In Q2 2026, 49% of US mortgages had a rate below 4% (FHFA).
Why haven’t home prices crashed?
Very few owners are forced to sell: about 0.3% of mortgages are underwater, against about 11% in early 2013 (FHFA).
How much more does the same house cost per month?
In this example, about $2,336 today against about $967 in January 2021 (own calculation from Freddie Mac and FHFA data).
Sources
- Freddie Mac: Primary Mortgage Market Survey®
- U.S. Department of the Treasury: Daily Treasury Par Yield Curve Rates
- Federal Housing Finance Agency: House Price Index
- Federal Housing Finance Agency: National Mortgage Database
- U.S. Bureau of Labor Statistics: Consumer Price Index and Average Hourly Earnings
- U.S. Census Bureau: New Residential Construction and New Residential Sales
- Board of Governors of the Federal Reserve System: FOMC statements and meeting calendar
Percentages, sums and conversions: our own calculations from these sources. DESK is a research tool and not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-11-11.