When 6% Becomes Normal: What Today’s Mortgage Mix Signals for 2025–26
The U.S. mortgage landscape has quietly crossed a pivotal threshold. For the first time in years, the share of mortgages carrying rates above 6% is closing in on, and soon will surpass, the share of mortgages locked in below 3%.
That crossover may sound like a statistic only economists would care about, but its implications are profound: the “new normal” in housing finance has shifted. The pandemic-era wave of ultra-cheap mortgages is fading into history, and a much larger slice of the market is now adjusting to rates north of 6%.
Quick Facts
Why the Crossover Matters
During 2020–2021, nearly a quarter of all mortgage holders locked in rates below 3%. That cohort created the deepest freeze in existing home supply in modern history, as homeowners had little reason to sell and trade a 2.8% loan for something twice as expensive.
But that dominance is fading. Today, roughly 20% of outstanding loans carry rates below 3%, while nearly 20% already sit above 6%. Soon, the latter group will be larger. That matters because it changes the balance of the market:
Fewer households are anchored by ultra-low rates. The shrinking sub-3% group means fewer owners are truly “stuck.”
More borrowers are already living with higher costs. As the 6%+ share grows, expectations reset. Rates that once seemed intolerable are now the reality for a growing slice of the market.
The New Normal
This isn’t about rates crashing back down into the 3s or 4s. It’s about the industry and consumers adapting to a landscape where 6–7% is no longer a shock, but a baseline.
The real story is this: if rates can consistently settle below 6%, the market may finally begin to open up. Why?
The “lock-in gap” narrows. Someone with a 3.5% loan still won’t love trading up, but the difference between 3.5% and 5.9% is far less daunting than jumping to 7%.
Move-up sellers regain flexibility. Equity-rich owners can justify a higher rate if lifestyle or location needs outweigh the cost.
Inventory pressure eases. More listings translate into a healthier balance between buyers and sellers, tempering the extreme tightness of recent years.
Implications for Texas Hill Country
For buyers and sellers in Boerne, Fair Oaks Ranch, and across the Hill Country:
Watch for gradual supply relief. As fewer owners are locked into sub-3% loans, more homes will come to market.
Builders stay ahead. New construction, with its ability to offer rate buydowns, remains a critical option for buyers navigating 6% territory.
Strong terms still matter. Cash and clean offers continue to win, even as inventory improves.
Bottom Line
The mortgage market has flipped: 6%+ loans are about to outnumber sub-3% loans. That crossover signals a new era where higher rates are normalized and fewer homeowners are sitting on the sidelines.
If mortgage rates can consistently stay under 6%, the housing market could loosen meaningfully—bringing more listings, more transactions, and more opportunity.
