Interest Rates and Supply

November 5, 2023


Interest rates over time

Why does the supply of homes available for sale remain at historical lows?

Here is a chart depicting all outstanding mortgages categorized by their respective mortgage rates. A majority of borrowers are currently locked into mortgage rates that are significantly lower than the prevailing rates in the current market environment.

In fact, approximately 30% of current homeowners (borrowers) are fortunate toInterest rates over time have interest rates that are below 3%, which is less than half of the present-day rates.

Even if mortgage rates were to decrease to 5%, a substantial portion of homeowners would continue to face a financial disincentive to consider moving.

This underscores the key reason why the housing supply remains at historically low levels.

To effectively stimulate an increase in supply and a potential decline in housing prices, an alternative catalyst or trigger is required.

Works Cited: