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Will The “Lock-In” Effect Slow Home Sellers?

Sometimes you have to move. Maybe you need a bigger house to accommodate a growing family. Maybe you need to move for a job. Whatever the case, there are certainly situations that make a move unavoidable. There are other times, however, that the decision to move isn't quite as clear cut. In those cases, there are many factors that can influence whether, or when, you move. According to Fannie Mae's Economic and Strategic Research Group, recent mortgage rate increases may be among them. Doug Duncan, Fannie Mae's senior vice president and chief economist, says current homeowners who have locked in a historically low mortgage rate may now be reluctant to move since selling their home would mean giving up their rate. “Households with a 3-percent, 30-year fixed-rate mortgage are unlikely to give that up ...” Duncan says. “We expect this so-called 'lock-in' effect to weigh on home sales.” Of course, whether or not the “lock-in” effect actually keeps homeowners from selling depends a lot on their particular situation and needs. But in a market with too few homes for sale, it's definitely something to watch.