Here is the breakdown of borrowers in the United States

The share of U.S. homeowners enjoying high interest rates on their mortgages has jumped sharply in just the past few years.

This has a noticeable impact on the refinancing market and a somewhat more subdued impact on home sales. Prices have been front and center in the debate about how to improve home affordability — and for good reason.

In 2022, after mortgage interest rates hit more than a dozen record lows, sparking a refinancing boom, barely 10% of homeowners had 30-year fixed mortgages with rates above 5%. Just four years later, that share had jumped to more than 30%, according to ICE Mortgage Technology. About 20% of borrowers have mortgages with an interest rate of more than 6%.

Home sales have been less than strong over the past few years, with the National Association of Realtors reporting a historic low of 4.06 million sales last year, essentially unchanged from 2024. That’s after hitting a 15-year high of 6.12 million home sales in 2022.

More recent sales, along with some cash-out refinancings, have pushed up the share of borrowers with higher interest rates.

There has been a significant focus by the Trump administration on lowering mortgage rates as a way to boost home affordability.

The president recently announced a plan for Fannie Mae and Freddie Mac to buy more than $200 billion in mortgage-backed securities. It’s still up for debate how much lower that would push mortgage interest rates once the purchase is made, but just the announcement alone caused rates to drop a bit.

Industry experts say the actual purchases are probably off about an eighth of a percentage point from the current 30-year rate, putting it right at about 6%. This time last year, the average interest rate on a 30-year fixed mortgage was just over 7%, according to Mortgage News Daily.

If the 30-year average moved to 6%, 5.5 million current homeowners would be able to benefit from refinancing, according to ICE Mortgage Technology. These homeowners can save at least 75 basis points on the interest rate, making the fees involved financially worthwhile, she said.

If rates dropped to 5.88%, that number would rise to 6.5 million homeowners.

“The most common interest rate that’s been used to buy a home over the last three and a half years is between 6.875% and 6.99%, right? No one wanted to tell their neighbors they used a 7% interest rate to buy a home, so everyone bought that high 6% range,” said Andy Walden, head of mortgage and housing market research at ICE Mortgage Technology.

“Coincidentally, those 15 basis point spread moves from the purchase of $200 billion of mortgage bonds, moves rates from what would be six and a quarter right now down to six and eight. So it provides a greater incentive for refinancing than would otherwise exist, and it has a significant impact on the market.”

Home loan refinance applications are now 120% higher than they were one year ago, according to the Mortgage Bankers Association.

As for home sales, the past four years have been characterized by a so-called “rate-fixing” effect, meaning that potential sellers did not want to give up historically low interest rates. Therefore, they postponed moves they might have otherwise wanted to make.

Going into 2025, there were nearly 39 million homeowners with an interest rate of less than 5%, and about 12 million with an interest rate of less than 3%, according to Walden.

“If you look at how these borrowers have behaved in the past year, you’ll find that only about 6% of those people walked away from those low rates, either by refinancing to take the equity out of their home or by selling their home. Nearly 95% of homeowners held on to those rates aggressively,” he said.

As for potential homebuyers, a 15 basis point drop in the 30-year fixed interest rate would save only about $35 a month in mortgage payments for the average home. Alternatively, they can maintain the price and buy 1.5% more homes.

“Definitely a step in the right direction, but it’s not a huge movement for these homebuyers,” Walden said.