The Golden Handcuffs: Could Portable Mortgages Unlock the San Diego Housing Market?

For years, San Diego homeowners have been sitting on a golden ticket: a mortgage with an interest rate of 3% or even lower. It has felt like a blessing, providing stability and predictable payments. But for many, this blessing has slowly turned into a pair of "golden handcuffs," locking them into their current homes and creating a stalemate in the housing market. The fear of trading a comfortable, low rate for a new one at 6% or 7% has kept thousands of potential sellers on the sidelines. But what if you could take your rate with you? This is the tantalizing promise of a "portable mortgage," a concept that is suddenly a hot topic of discussion, as explored in a recent Realtor.com article titled "Portable Mortgages May Ease Lock-In—but Not Affordability."

A portable mortgage is exactly what it sounds like: a home loan that you can pack up and take with you to your next property, keeping your original interest rate and terms intact. While this is a common practice in countries like Canada and the United Kingdom, it is not currently an option in the United States. However, with the housing market gridlocked by the lock-in effect, policymakers are now evaluating the idea as a potential solution to get people moving again.

The appeal is obvious. For a San Diego homeowner who secured a 3.5% rate in 2021, the ability to move to a new home without doubling their interest rate would be a game changer. It could unlock a wave of new inventory as families who have outgrown their homes or need to relocate for work could finally afford to sell. This could bring much needed life into our stagnant market.

However, experts quoted in the Realtor.com piece urge caution. While portable mortgages could help existing homeowners, they would do little to solve the fundamental affordability crisis facing our city. For the thousands of renters and first time buyers in San Diego struggling to get a foothold, this policy offers no relief. In fact, it could make things worse. By allowing more move up buyers to enter the market with their low rate advantage, it could increase competition for the already limited number of homes for sale, potentially driving prices even higher.

So, what is the practical advice for San Diegans navigating this landscape?

For Sellers: Do not hold your breath waiting for portable mortgages to become a reality in the U.S. The concept faces significant hurdles within our complex mortgage finance system. Instead of waiting for a policy that may never come, focus on the options available to you today. If you have a VA or FHA loan, it may be assumable, allowing a buyer to take over your low rate. This is a powerful marketing tool that can make your home stand out. Alternatively, consider renting out your current home to keep your low rate mortgage in place while you move to a new property. An experienced real estate advisor can help you weigh the financial pros and cons of each strategy.

For Buyers: A portable mortgage is not the silver bullet that will suddenly make San Diego affordable. The path to homeownership still requires financial discipline and strategic planning. The best thing you can do is get your finances in order and get pre-approved for a loan so you are ready to act when the right opportunity arises. It is also worth specifically seeking out properties with assumable VA or FHA loans. Taking over a seller's low interest rate could save you thousands of dollars over the life of your loan and make an otherwise unaffordable property suddenly within reach.

Ultimately, the conversation around portable mortgages highlights the central challenge in our market: the tension between inventory and affordability. While it is an interesting idea, it is not a solution for everyone. True, long term relief will only come from building more homes and creating more pathways to ownership for first time buyers. If you are feeling stuck in your current situation, let's talk. We can explore the creative strategies that are working in today's market and help you break free from your golden handcuffs. Visit our website to learn more.

This blog post is an analysis of the article "Portable Mortgages May Ease Lock-In—but Not Affordability" published by Realtor.com.