New York Fed President John C. Williams has a message for anyone waiting for the US housing market to unclog: bring a chair, you’ll be here a while.
Williams stated that many Americans still hold low-rate mortgages secured during the pandemic-era borrowing bonanza, and that resolving this structural imbalance will take years. The comment underscores a growing consensus among Fed officials that one of the most stubborn side effects of aggressive rate hikes, the so-called “lock-in effect,” has essentially frozen a massive chunk of the housing market in place.
The numbers behind the gridlock
As of the first quarter of 2026, roughly 19.5% of outstanding US mortgages carry rates below 3%. That’s down from a peak of 24.6% in Q1 2021, but the decline has been painfully slow.
Nearly half of all US mortgages still sit below 4%. Meanwhile, current mortgage rates hover between 6-7%. Fed research estimates that the rate hikes beginning in 2022 drove a 44% decline in homeowner mobility.
