Portable Mortgages: Exciting on the Surface, Complicated Behind the Scenes

Portable mortgages are getting a lot of buzz right now, and it’s easy to see why. So many homeowners locked in those incredible 2% and 3% rates during the pandemic, and they’re understandably reluctant to give that up. A portable mortgage would let them take that rate with them when they move, which could finally add some movement to a market that has felt stuck for almost three years.

On paper, it sounds like a win. If you’re sitting on a once-in-a-lifetime rate, moving suddenly becomes a lot easier.

But here’s the catch, and it’s a big one. The very thing that makes portable mortgages so appealing also makes them unfair for a lot of buyers. It essentially splits the market into two groups: people who hold a “golden ticket” low-rate mortgage, and those who don’t. Anyone carrying that ultra-low rate could come in stronger and outbid buyers who don’t have that advantage.

Yes, portability could bring more homes to the market, which we desperately need. But the added demand from buyers holding those cheap rates could send prices climbing even faster, just like we saw during the pandemic.

There’s another layer most people don’t think about: the impact on mortgage-backed securities. Portable mortgages don’t fit neatly into the current system, and that uncertainty introduces more risk for investors. When investors need more protection, they want higher returns. Higher returns often mean higher mortgage rates for everyone else, plus a more complicated process for originating and servicing loans.

So while the idea sounds exciting, the ripple effects are anything but simple. It could free up inventory, but it could also deepen affordability challenges for buyers who aren’t sitting on those historic rates.

As always, if you’re thinking about a move and want to understand how these ideas might impact your options, I’m here to help you navigate it.