3 Ways Homeowners Feel ‘Trapped’ Despite Interest Rates Drop and What To Do About It
Written by
Laura Beck
Edited by
Levi Leidy
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Just a few years ago, interest rates were at an all-time low, and people rushed to buy homes. They were able to take advantage of rates that made mortgages affordable and they locked in low monthly payments. It seemed like the perfect time to become a homeowner. But the market has shifted a lot since then, and many of those same buyers now feel stuck in a difficult situation.
According to a recent survey conducted by West Shore Home, rising mortgage rates have made many homeowners feel “trapped” in their current homes. The rates have climbed so high that selling and buying a new property would mean taking on much higher monthly payments. This just isn’t feasible for many people. So they’re staying in houses that don’t suit their needs anymore.
Here’s a look at what you can do if you find yourself in this situation.
Understanding the Problem
During the pandemic, interest rates went down to record lows. In 2021, the average went as low as 2.65%. But now, in late 2024, the average is around 7%. That’s lower than it’s been — the average rate peaked at 8.01% in 2023 — but it’s a lot more expensive to sell and buy a new house right now. This means people are holding onto their current low rates, even if they really want to move.
The survey showed that 41% of these homeowners are staying in their homes longer than they meant to when they bought. Almost 23% said they want to sell their home, but feel like they can’t. It just doesn’t make sense for them financially. If they did sell their home, they wouldn’t be able to afford to buy a different one at the current rates. And almost half said they don’t think they could afford their own home if they were to buy it today.
That’s why nearly 58% of the surveyed homeowners said they’re feeling “stuck” and “locked in” to their homes right now.
The number of homeowners staying put also slows down the entire housing market. Since fewer people are selling their homes, supply is limited. That means prices are higher and buyers have fewer options.
Impacts on Major Life Decisions
The situation has affected people in more ways than one. More than half in the survey (54.3%) said they’ve had to change their long-term plans because of interest rates.
Jobs
Almost 37% of those surveyed said they’ve turned down job offers that would mean they’d have to move.
Growing Families
Others are waiting to have children. In the survey, nearly 30% said the home they’re in now just doesn’t have enough space for them to have children right now.
Aging in Place
Some homeowners weren’t expecting to stay in their current home long term, but now they feel like they will age in place. Over 26% of the homeowners in the survey said they didn’t mean for their current home to be their “forever home.” But the current situation has changed their minds. To meet their needs as they get older, they’re renovating to add accessibility features like walk-in showers, ramps and grab bars.
What To Do About It
Instead of moving, a lot of these homeowners have decided to renovate. If they can’t move, then they’ll have to change their current home to make it work for their needs.
Around 62% of the homeowners in the survey said they would rather invest in home renovations than take on a higher mortgage on a new house. That includes remodeling their kitchens, their bathrooms, new floors, as well as cosmetic changes like fresh paint.
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