For Homeowners Who Bought When Mortgage Rates Were Below 3%, Today's Market Is Paralyzing. Some Say '2.5% Is Basically Free Money'
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When mortgage rates dipped below 3% during the pandemic, millions of homeowners locked in deals they now call once-in-a-lifetime. But as rates now hover above 6%, many of those same owners say they feel stuck. Upgrading, upsizing or relocating has become financially irrational, even for families who badly want more space.
Low Rates Have Homeowners Stuck In Place
The Reddit community r/MiddleClassFinance recently lit up with personal stories from homeowners who bought or refinanced during the ultra-low-rate era. One person summed up the sentiment best: “I don't think I'm ever selling. If I buy another house, I'll try to keep this one as a rental. 2.5% is basically free money.”
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Another person shared, “Going to be hard to beat $1,136/month. 2.75%/30yr. Bought in 2020. Probably here forever-ever.”
Many agreed. A low interest rate isn't just cheap; it's become a golden handcuff. “I have 3.5% with 10 left on a 20-year loan. I’m not going anywhere,” one commenter wrote. “Not because of interest rates but because I don’t need an upgrade or a bigger house. I’m happy in my small house with my family and our pets.”
Another said, “3.25%. I really just don't want to move again until they need to take me to assisted living (or a single level 55+ community) because I can't handle stairs anymore.”
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Trading Up Comes With Trade-Offs
Some commenters have moved anyway, but almost never for purely financial reasons. A few cited better school districts, mental health, or simply outgrowing a starter home. One family left their 2.25% rate behind for 7% interest in the suburbs. “We now have two kids and a dog who needed a yard,” they wrote. “I would choose this house and our 7% interest for our current life a thousand times over.”
Others echoed that not every decision is about the bottom line. “Was it a smart financial decision? Absolutely not,” one dad admitted after moving closer to his wife's family and better schools. “But my wife is happier, my daughter goes to better schools, and we have a lot more support than we ever had.”
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