Metros with High Mortgage Concentrations Could See Near-Term Market Strength

Mortgage rates dipping into the low-6% range are beginning to open up new opportunities for buyers—particularly in markets where the majority of homeowners carry mortgages.

Shifts in Mortgage Payments

For context, the monthly principal and interest payment on a $400,000 home with a 20% down payment at a 6.58% mortgage rate is approximately $2,039. That figure falls to $1,972 at a 6.26% rate, and further to $1,939 at 6.1%. Even small rate declines can improve affordability for potential buyers.

Rate Lock-In and Market Dynamics

Although refinance activity has picked up as rates drop, home purchase demand has been slower to respond due to widespread “rate lock-in” effects—homeowners with sub-6% loans are reluctant to sell and give up their lower rates.
According to Fannie Mae’s National Mortgage Database, the average rate on outstanding mortgages was 4.3% in Q1 2025. Meanwhile, Realtor.com estimates that over 80% of current mortgages carry rates below 6%, underscoring why many sellers remain sidelined.

Seasonal Market Conditions

Data from Redfin shows that this past summer was one of the strongest buyer’s markets in the last decade, with sellers outnumbering buyers by 35%. September further boosted affordability as the average 30-year fixed mortgage rate dropped from 6.58% (late August) to 6.26% (mid-September), according to Freddie Mac.

Markets Most Likely to Respond

A new report from Realtor.com highlights that metros with higher shares of mortgaged households are best positioned to benefit from lower rates:

• Washington, D.C. – 73.6% of homeowners have a mortgage

• Denver, CO – 72.9%

• Virginia Beach, VA – 70.7%

In these markets, falling rates could unlock more inventory and drive faster-moving conditions. By contrast, metros with older populations and more outright owners may see a slower response.

For example:

• Miami, FL has the highest share of outright homeowners (44.8%).

• Buffalo, NY and Pittsburgh, PA follow closely (44.2% each).

Nationally, about two-thirds of homes are owner-occupied, and two-thirds of those owners have a mortgage.

Implications for Buyers and Sellers

• Buyers: In mortgage-heavy metros, modest rate declines could rapidly expand available options and increase competition.

• Sellers: Those in high-mortgage markets may face quicker sales and more bidding activity, while outright-owner markets are likely to remain steadier with less volatility.

State-Level Breakdown

At the state level, the highest shares of mortgaged homeowners are found in:

• District of Columbia – 74.3%

• Maryland – 70%

• Colorado – 69%

• Utah – 68%

• California – 66%

States with the most outright owners include:

• West Virginia – 44.9%

• Mississippi – 48.4%

• New Mexico – 49.4%

• North Dakota – 51.3%

• Louisiana – 51.8%