Mortgages with rates below 6% are falling

unnamed
85.6% of mortgaged homes have a rate below 6%, down from the peak of 92.8% in Q2 2022. That’s one of the central conclusions revealed by the Federal Housing Finance Agency’s (FHFA) latest update on residential mortgages. Here’s what else the agency reports:
  • Nationwide, mortgage holders carry only 48% loan-to-value (LTV) on their homes, down from 70% a decade ago.
  • Adjustable-rate mortgages (ARMs) account for 3.5% of outstanding mortgages, down from 9.6% one decade ago.
  • The average credit score among borrowers with an active loan is 743.
  • There were 50.8 million outstanding mortgages with unpaid balances totaling $11.7 trillion at the end of Q1 2024.
Our take
That 85.6% of mortgaged homes with sub-6% rates is the reason why many experts feared that homeowners wouldn’t list their properties for sale this year. Well, we are seeing some movement. While the “lock–in” effect hasn’t subsided entirely, new listings have spiked by nearly 10% year-over-year. But our big takeaway from this report is that current mortgage holders are doing great. They have a high credit score on average, their LTVs are great, the number of outstanding ARMs is very low, and nearly all of them are flush with equity. Current homeowners are sitting pretty!