Barely a day goes by when interest rates are not front-page news, as buyers, sellers, and those looking to refinance anxiously await news of a rate cut in hopes of reducing their mortgage payments. However, not all states are the same regarding the amount of money homeowners stand to lose if they move. That’s because each state has its own mortgage rate averages, which tend to stay around the national average. At the time of this writing, that’s 6.85%.
But despite the clamor for a rate change, most homeowners in the U.S. are not feeling the crunch of high interest rates in their mortgage payments. That’s because 86% of current mortgages are below 6%, with the average rate being 4.1%, according to a report in U.S. News.
The extent of the stranglehold, or mortgage lock-in effect that the homeowner or investor experiences, is based on a borrower’s current mortgage rate versus the rate they would have to pay for another house, should they decide to move. For many Americans, that is around a 3% loss. For example, if your current rate is 4% and the national average is 7%, that 3% differential or rate gap will determine how much it will cost you to move within that state.
According to the U.S. News report, at the time of writing, the average mortgage rate lock-in gap was 3.15 percentage points. Using the national average loan amount of $357,000, the principal and…