Sotheby’s International Realty broker Jenna Stauffer discusses U.S. mortgage rates in “The Claman Countdown.”
Bill Pulte, director of the Federal Housing Finance Agency, said the government agency is “actively evaluating” portable mortgages, which would allow a homeowner to transfer their loan from their current home to a new home if they move.
With assumable mortgages, the homeowner could essentially keep their existing interest rate and terms instead of paying off the loan and getting a new one. It’s a strategy designed to inject movement into a stagnant housing market. Many homeowners and potential buyers have been left on the sidelines because they are reluctant to trade their sub-3% mortgage rates for current loans hovering around 6.5%.
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Krimmel called Pulte’s proposal “a brazen attempt to ‘solve’ the lock-in effect.”
There’s a “for sale” sign outside a house in Los Angeles, California. (Patrick T. Fallon/AFP via Getty Images)
When a typical homeowner moves today, they usually have to pay off their existing loan early and take out a new one at prevailing rates. Theoretically, Krimmel said if that interest rate differential was the only thing holding back mobility, portable mortgages might unlock some activity and free up inventory.
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However, Krimmel pointed to a May 2025 Federal Reserve report that found the lock-in effect explained only about half of the recent decline in mobility.
When a homeowner moves today, they typically have to pay off their existing loan early and take out a new one at current rates. (Photographer: Eric Thayer/Bloomberg via Getty Images/Getty Images)
“It is not clear that portability would return sales to normal levels,” Krimmel said, adding that the benefits of a portable mortgage would also be “highly selective.”
With transferable mortgages, Krimmel said only current mortgage holders with low interest rates would benefit, while renters and homeowners without a mortgage would still face current rates.
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But he says feasibility is the bigger problem.
“The U.S. mortgage system is based on securitization, where loans are aggregated and priced based on the specific properties they support,” Krimmel said. “Mortgages should be tied to the home they come from so investors can assess collateral risk.”
If a mortgage were to become transferable, ‘the collateral (and therefore the risk profile of the entire pool) would change halfway through’, which would break the logic of securitization. They would also eliminate models used to predict how quickly homeowners will pay off their mortgages and how long those loans will last, both of which are critical to the valuation of mortgage-backed securities.
There’s a “for sale” sign outside a house in Los Angeles, California. (Patrick T. Fallon/AFP via Getty Images)
If buyers no longer have to pay their current mortgage when they move, the term of these loans would “extend sharply and unpredictably,” Krimmel said. Investors would therefore demand higher compensation for that extension risk, which would “raise mortgage rates first abruptly and then structurally through wider spreads over the ten-year government bond.”
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The problems also extend further than that. For example, Krimmel said origination and maintenance would become much more complex because liens, escrows, taxes and title obligations all depend on the specific property.
“Overall, portable mortgages may seem like a good way to mitigate the lock-in effect – a niche problem unique to current market conditions; but widespread implementation would raise thorny technical issues and significant unintended consequences – many of which are worse than the problem they are trying to solve,” he said.
