---
title: "Mortgage Lock-in: A Review of the Literature"
authors: "Kristopher Gerardi; Franklin Qian; David Zhang"
source: "Federal Reserve Bank of Atlanta (Working Paper 2026-11)"
source_url: "https://www.atlantafed.org/research-and-data/publications/working-papers/2026/08/03/11-mortgage-lock-in-review-of-the-literature"
paper_id: "Atlanta Fed WP 2026-11"
harvested: 2026-09-28
year: 2026
keywords: [mortgage lock-in, fixed-rate mortgage, household mobility, house prices, rents, labor reallocation, housing supply, interest rate lock]
pdf_url: "https://www.atlantafed.org/-/media/Project/Atlanta/FRBA/Documents/research-and-data/publications/working-papers/2026/08/03/11-mortgage-lock-in-review-of-the-literature.pdf"
---
## Abstract

This paper reviews the rapidly growing literature on mortgage lock-in and its effects on household mobility, labor reallocation, home sales, owner-occupied prices, and spillovers into rental and commercial markets. We then discuss two future research directions: (1) separately identifying lock-in effects from the direct effects of the existing interest rate on the mortgage, which have different implications for household behavior as market interest rates rise, and (2) assessing the general-equilibrium consequences of reduced mobility on labor markets and productivity. We close by discussing policy responses, including portability, broader assumability, and a Danish-style delivery option.

JEL classification: G18, G21, E52. Key words: mortgage lock-in, fixed-rate mortgage (FRM), household mobility, house prices, rents. DOI: 10.29338/wp2026-11

## Why it's in the StratMac library

- **Literature review of exactly the mechanism the HOUST/PERMIT story needs.** The Real-Estate Sector Forecasting work in this library models housing starts and permits; mortgage lock-in is the standard explanation for why a rate-driven freeze in existing-home transactions does not simply translate into new construction — it suppresses *turnover* while supply stays locked in place.
- **Names the identification problem SM would otherwise walk into.** The paper's own first research direction is that lock-in effects and the direct effect of the standing mortgage rate are not separately identified in much of the literature, and they carry *different* implications as market rates rise. That is a direct caveat on any housing card that regresses activity on rates.
- **Transmission into labour and rents.** Household mobility → labor reallocation → productivity, plus explicit spillovers into rental and commercial markets, which is the channel by which a housing freeze reaches SM's `labor` and `staples` (rent) series rather than staying inside the housing section.
- **Policies already proposed** (portability, broader assumability, Danish-style delivery option) are the counterfactual set if the lock-in concern is taken seriously.