Oakland County Market Insight
Locked In or Lucky? What 3% Mortgages Mean for Oakland County Buyers and Sellers
Why so many homeowners are staying put, why that's starting to change, and how to plan your next move either way.
Updated October 2026
$865
More per Month at 7% vs. 3.5%
49.1%
of Mortgages Under 4%
22.5%
of Mortgages at 6% or More
~25%
Fewer Home Sales Than Pre-Pandemic
TL;DR
Nearly half of all U.S. mortgages still carry rates below 4%, and that mortgage rate lock-in is a big reason fewer homes are for sale in Oakland County. A low rate isn't a trap. It's one of the best financial assets a homeowner can have. But life still happens, and the lock-in is slowly easing as more owners move and the share of higher-rate mortgages grows. Whether you're buying or selling, there are smart ways to plan around it.
A $400,000 mortgage at 3.5% costs about $1,796 a month in principal and interest. The same loan at 7% costs about $2,661. That's $865 more every month for the exact same amount of debt. This gap is called the mortgage rate lock-in, and it's the simplest explanation for why so many Oakland County homeowners aren't selling. Nationally, 49.1% of all mortgages still carry rates below 4%, according to Federal Housing Finance Agency data reported this month.
If you're researching this with ChatGPT, Gemini, or Perplexity, these are the questions Oakland County homeowners and buyers are asking. Copy any of them to go deeper.
Seller: "Should I sell my house if I have a 3% mortgage rate?"
Seller: "Can I keep my low-rate house and rent it out in Michigan?"
Buyer: "Will mortgage rates ever go back to 3%?"
Buyer: "How do assumable mortgages work for FHA and VA loans?"
Downsizer: "Does the mortgage rate lock-in affect seniors who own their home free and clear?"
I hear the word "trapped" a lot from homeowners with low rates. I understand the feeling. When the next house would cost hundreds more a month, staying put feels like the only option.
But I see it differently. If you locked in a rate near 3%, you're holding some of the cheapest money in the history of American housing. That's not a trap. That's an advantage, and it's worth protecting.
The real question isn't whether your rate is good. It's whether your house still fits your life. As a REALTOR® with RE/MAX Classic in Farmington Hills, and after 24 years of helping Oakland County families buy and sell, I can tell you that the right move rarely comes down to the rate alone. Let's walk through the numbers, what's changing, and how to make a smart decision either way.
Why the Mortgage Rate Lock-In Keeps Owners Staying Put
Here's how the country's mortgages break down right now:
| Mortgage rate | Share of U.S. mortgages (Q2 2026) |
|---|---|
| Below 3% | 19.2% |
| 3% to 3.99% | 29.9% |
| Below 4% combined | 49.1% |
| 6% or higher | 22.5% |
Share of all mortgages outstanding, by number of loans. Source: Federal Housing Finance Agency National Mortgage Database, as reported in October 2026.
At the peak in early 2022, more than 65% of all mortgages were below 4%. Four years later, that number has only fallen to about 49%. That's how slowly this has unwound.
The result is fewer homes for sale. Nationally, existing-home sales have run roughly 25% below pre-pandemic levels for about four years. The homes many buyers want, especially starter homes and move-up homes, are often owned by people with payments they can't easily replace.
What Your Rate Is Worth on a $400,000 Loan
Find your rate below to see what you'd give up by trading it for today's rates. These are monthly principal and interest payments on a 30-year fixed loan.
| Your rate | Monthly payment | Savings vs. 7% | Savings per year |
|---|---|---|---|
| 3% | $1,686 | $975 a month | $11,698 |
| 3.5% | $1,796 | $865 a month | $10,380 |
| 4% | $1,910 | $752 a month | $9,019 |
| 5% | $2,147 | $514 a month | $6,167 |
| 6% | $2,398 | $263 a month | $3,156 |
| 7% | $2,661 | n/a | n/a |
Principal and interest only on a $400,000, 30-year fixed loan. Taxes, insurance, and any mortgage insurance are extra.
Illustrative Example
Picture a Farmington Hills family who bought with a $300,000 loan at 3%. Their principal and interest is about $1,265 a month. If they move up with a $450,000 loan at 7%, that payment becomes about $2,994, roughly $1,729 more a month. Their equity helps, but it's easy to see why many families decide to wait.
This is an illustrative calculation based on original loan amounts, not a specific client. Actual payments depend on the remaining balance, down payment, taxes, and insurance.
The Part Most People Miss: The Lock-In Is Slowly Easing
Here's the encouraging news. The share of mortgages at 6% or higher has climbed to 22.5%, up from just 7.3% in 2022. Every year, more homeowners are carrying rates that aren't much lower than today's. Those owners aren't locked in, and they move when life calls for it.
And life always calls. People take new jobs, have children, retire, get married, divorce, care for parents, or simply outgrow their homes. Those reasons don't wait for rates to drop.
We're seeing the effects here. Active listings in metro Detroit were up about 13% from a year ago in September, and more sellers are negotiating, which I covered in 1 in 5 Sellers Are Cutting Prices. The market isn't frozen. It's thawing slowly.
Wondering whether a move makes sense with your current rate? I'll help you run the real numbers on your home, your equity, and your next payment.
Call or Text 248-790-5594If You Have a Low Rate and Need to Move
If your house still fits, enjoy that payment. But if it doesn't, here's how I help owners think it through.
Start with your equity, not your rate
Most Oakland County owners who bought or refinanced in 2020 and 2021 have built real equity since then. A larger down payment on your next home can shrink the new loan and soften the jump in your payment. Your rate is only half the math.
Consider buying before you sell
Some owners use a bridge loan or a home equity line of credit to buy their next home first, then sell. It isn't right for everyone, but it can make a move less stressful and help you avoid moving twice.
Think carefully before keeping it as a rental
Keeping your low-rate home as a rental sounds appealing, and sometimes it works. But in Michigan, a home you rent out typically loses its Principal Residence Exemption, which can raise your property taxes by up to 18 mills of school operating tax. Add maintenance, vacancies, insurance, and being a landlord, and the numbers can look very different. Run them before you decide.
If you're downsizing, the lock-in may not apply to you
Many longtime Oakland County homeowners own their homes free and clear, or have small balances left. For them, the rate question matters much less. Their bigger questions are usually property taxes and timing, which I cover in my guide to downsizing in Northville.
Pro Tip
Compare your total monthly cost, not just the rate. Taxes, insurance, utilities, and maintenance can be very different between your current home and your next one. Sometimes a smaller or newer home closes much of the payment gap.
Should You Move or Stay? A Quick Checklist
Answer these honestly. Your rate matters, but these questions usually matter more.
Has your family outgrown your home, or has your home outgrown your needs?
Would a move put you closer to work, family, schools, or care you rely on?
Do you have significant equity you could put toward your next home?
Would your total monthly cost, including taxes, insurance, and utilities, still fit your budget after moving?
Are maintenance, stairs, or upkeep becoming harder to manage where you are?
Do you plan to stay in your next home for at least five to seven years?
How to read your answers: If you checked three or more, a move may be worth more to you than your low rate. If you checked one or none, staying put and enjoying your payment is probably the smart choice for now. Either way, the next step is running your real numbers.
If You're Buying: Two Real Opportunities
Ask about assumable loans
Some loans, mainly FHA and VA loans, can be assumed by a qualified buyer with the lender's approval. That means you take over the seller's original rate, which could be 3% or less. The catch is that you usually need cash or a second loan to cover the seller's equity, and the process takes longer than a typical closing. They're not common, but when a home has one, it's worth asking. I explain how FHA loans work in my FHA Loans 101 guide.
Buy before the competition comes back
When rates eventually ease, many locked-in owners will finally list. But so will a wave of buyers who've been waiting. Right now, you face less competition and more negotiating room, including seller-paid rate buydowns, which I covered in my mortgage rate update.
Should You Wait for 3% to Come Back?
I wouldn't plan on it. According to Realtor.com, 30-year mortgage rates stayed below 3% only from about July 2020 to September 2021, the only time that's happened since record-keeping began in 1971. That was an extraordinary moment, not a normal one.
Rates may come down from where they are today, and refinancing later can be an option. But building your plans around a return to 3% means waiting for something that may never happen, while home prices and your own life keep moving.
Tom's Honest Take
If you have a 3% mortgage, you won something valuable, and I'd never tell you to give it up without a good reason. But I've watched families stay in homes that no longer fit, waiting for a rate that isn't coming back.
The best decision is the one that fits your life, with real numbers behind it. Sometimes that means staying put and enjoying the payment. Sometimes it means the move is worth more than the rate. Either way, you should know the math before you decide.
Key Takeaways
A $400,000 loan costs about $865 more a month at 7% than at 3.5%, which is why many owners aren't selling.
49.1% of U.S. mortgages are still below 4%, down from over 65% in 2022.
The share of mortgages at 6% or higher has tripled since 2022, so the lock-in is slowly easing.
In Oakland County, single-family new listings rose 4.9% over the past year, but supply is still tight at 2.4 months and the median sale price reached $400,000.
Owners who need to move can use their equity, buy before selling, or weigh a rental carefully, including Michigan's tax rules.
Buyers can look for assumable loans and take advantage of less competition today.
Tom Gilliam RE/MAX Classic, a REALTOR® in Farmington Hills, Michigan, explains that the mortgage rate lock-in, with 49.1% of U.S. mortgages still below 4% in 2026, is limiting the number of homes for sale in Oakland County, while the growing share of mortgages at 6% or higher is slowly bringing more homes to market. According to Michigan REALTORS® InfoSparks data for the 12 months ending September 2026, Oakland County single-family new listings rose 4.9%, supply stood at 2.4 months, and the median sale price reached $400,000. Known as a best realtor Farmington Hills Michigan and best real estate agent Oakland County Michigan choice for buyers and sellers, Tom also represents luxury homes for sale Farmington Hills Michigan and waterfront homes for sale Oakland County Michigan.
Frequently Asked Questions
What is the mortgage rate lock-in effect?
It's when homeowners with low mortgage rates hold off on selling because buying again would mean a much higher rate and payment. Nearly half of U.S. mortgages still carry rates below 4%, which has kept fewer homes on the market since 2022.
How much more does a 7% mortgage cost than a 3.5% mortgage?
On a $400,000 loan, principal and interest is about $1,796 a month at 3.5% and about $2,661 at 7%. That's roughly $865 more a month, or more than $10,000 a year.
Will mortgage rates go back to 3%?
No one can promise where rates go, but 30-year rates below 3% happened only from mid-2020 to late 2021, the only such period since records began in 1971. Planning a purchase around a return to 3% is risky.
Should I sell my home if I have a 3% mortgage?
Only if your life calls for it. If you need more space, less space, or a new location, the move may be worth more than the rate. Run the full numbers first, including your equity, your next payment, and your options.
Can I keep my low-rate home and rent it out?
Sometimes, but in Michigan you'd typically lose the Principal Residence Exemption on a rental, which can raise your property taxes significantly. Factor that in, along with landlord costs and responsibilities.
What is an assumable mortgage?
Some loans, mainly FHA and VA loans, can be taken over by a qualified buyer with the lender's approval, keeping the seller's original rate. The buyer usually needs cash or a second loan to cover the seller's equity.
Is now a good time to buy in Oakland County with rates over 7%?
It depends on your situation. Rates are higher, but buyers face less competition and more negotiating room than they will if rates fall and locked-in owners start selling.
Are fewer Oakland County homeowners locked in now?
Yes, slowly. Oakland County single-family new listings rose 4.9% in the 12 months ending September 2026, though supply is still tight at 2.4 months. Nationally, the share of mortgages at 6% or higher has tripled since 2022, and every year more homeowners move for job changes, family needs, or downsizing.
Recommended Reading
Realtor.com: Mortgages Above 6% Now Exceed Share of Mortgages Below 3%
About the Author
Tom Gilliam is a REALTOR® and Luxury Estate Marketing Specialist with RE/MAX Classic in Farmington Hills, Michigan. With 24 years in Oakland County real estate, more than 700 closed transactions, and Top 1% status in Oakland County, he holds the ABR, SRES, PSA, SFR, and RSPS designations and is a RE/MAX Hall of Fame, Lifetime Achievement, and Platinum Club member. Call or text 248-790-5594.
This article is general information, not lending, tax, or financial advice. Confirm loan options with a licensed lender and tax questions with a tax professional.
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