When mortgage rates are too low to give up

The Indicator from Planet Money

NPR

Business

4.7 • 9.2K Ratings

🗓️ 17 August 2023

⏱️ 9 minutes

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Summary

The average mortgage rate in the U.S. just hit 7.09%—its highest level in more than two decades. And that's having ripple effects in the wider economy. Some homeowners feel locked in, tethered to their super low interest rates and unable to find something better. Today on the show, what happens when homeowners are locked in by low rates?

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Transcript

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0:00.0	NPR.
0:12.0	This is the Indicator from Flatup Money, I'm Darien Woods.
0:15.1	And I'm Whalen Wong.
0:16.2	You know, I can think of times when I've been peer pressured into going to Happy Hour,
0:21.4	buying a trendy water bottle.
0:23.5	But Alex Falcon Grove, he ended up with a bigger ticket purchase.
0:28.1	I was pretty much peer pressured into buying a house.
0:31.2	This was in 2019.
0:32.7	Alex's coworker had just gotten his real estate license and wanted Alex to be his first client.
0:38.4	Alex was newly married and didn't have a lot of savings.
0:41.1	But he scraped together the money for a down payment.
0:43.7	And he and his wife bought their first home just outside of Denver.
0:47.3	And that interest rate was 4.125% on a 30-year mortgage.
0:54.0	We re-fi two years later and that's a 15-year mortgage at 2.375%.
1:01.9	I don't know that they're ever going to be this low ever again.
1:04.3	I like the position, down to three decimal points.
1:06.8	Yes, very exact.
1:08.1	And Alex is in good company.
1:10.3	Freddie Mac, the government-sponsored mortgage provider, says that more than half of mortgage borrowers
1:15.5	have a rate at or below 4%.
1:18.5	And this is thanks to record low interest rates in the last few years.
1:22.4	But with the Federal Reserve now hiking interest rates, mortgage rates are over 7%.
	...

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