Persistently elevated mortgage rates and rising home prices are intensifying affordability challenges for U.S. homebuyers, particularly first‑time buyers, and creating a “lock‑in” effect.
As of early 2026, the average rate on new 30‑year fixed‑rate mortgages (FRMs) hovered around 6.16%, significantly above the 4.4% average on existing mortgages. Roughly 20% of outstanding loans carry interest below 3%, disincentivizing many current homeowners from selling and constraining housing inventory. This “lock‑in” may have reduced household mobility by an estimated 16% and imposed roughly $20 billion in economic losses in 2022–2023, according to National Bureau of Economic Research data.
Emma Waters, senior policy analyst for the Bipartisan Policy Center (BPC), recently examined options to alleviate the housing affordability crisis and explored the expansion of assumable mortgages and the creation of portable mortgages to unlock market activity. Waters was previously the project manager for BPC’s Energy Program, and before coming to BPC, she was a case manager at a nonprofit organization in Chicago focused on workforce development.
Assumable mortgages allow qualified buyers to take over a seller’s existing loan with favorable interest terms.
Currently, only a minority of loans — those backed by FHA, VA, or USDA — are assumable, comprising about 23% of the approximately 52 million outstanding mortgages. While assumptions surged 139% from 2022 to 2023, the total number remains modest, at approximately 6,000 transactions in 2023.
Portable mortgages, a concept common in Canada and in the United Kingdom but not yet available in the U.S., would permit homeowners to carry their existing mortgage terms when purchasing a new home. Proponents argue this could ease lock‑in and boost mobility, though both assumable and portable products face upfront equity and transaction cost challenges and may exert upward pressure on housing prices.
“Buyers benefit from assumable mortgages if they are able to secure a lower interest rate than they otherwise would in today’s relatively high-interest rate environment,” said Waters in her findings. “A lower interest rate can make monthly mortgage payments significantly more affordable, potentially saving thousands of dollars over the loan term. For sellers, having an assumable mortgage can be an advantage over other homes on the market, which may lead to higher offers or help the home sell more quickly.”
According to the data, such reforms alone will not resolve fundamental housing supply shortages, estimated between 1.5 million and 6.8 million units, nor fully address affordability barriers without broader construction and policy initiatives.
“Buyers who assume a mortgage must pay the seller for the value of the home the seller already ‘owns’ — their equity,” added Waters. “This upfront cost may be more than a typical down payment amount if there is a significant difference between the sale price and the homeowner’s mortgage balance. With home values nearly doubling over the last 10 years, buyers can be on the hook for a hefty payment at the time of purchase, an amount that must be paid in cash or possibly by taking out a second loan. For first-time homebuyers, with typical down payment amounts ranging from 6% to 9%, the potentially higher upfront cost of a home with an assumable mortgage can be prohibitive.”
