How mortgage lock-in is quietly pushing up house prices
A new paper co-authored by Wharton’s Lu Liu argues that homeowners stuck with low fixed mortgage rates aren’t just frozen in place—they’re propping up the housing market.
2 min. read
When the Federal Reserve raised interest rates between 2022 and 2024, U.S. existing home sales fell by roughly 40% to levels last seen after the Great Recession. By textbook standards, prices should have followed sales downward. They didn’t. Real house prices stayed remarkably stable.
A new paper, “Unlocking Mortgage Lock-In: Equilibrium Effects in a Spatial Housing Ladder Model,” explains the puzzle. Co-authored by Wharton finance professor Lu Liu, the study argues that a single feature of the U.S. mortgage market—the inability to take a low fixed mortgage rate with you when you move—turns rising interest rates into an unexpected source of housing demand.
The paper builds on the authors’ earlier work documenting “mortgage lock-in”: the phenomenon where homeowners who locked in cheap mortgages during the historically low-rate years of 2020 and 2021 refuse to sell, because doing so would force them to give up those rates. In the new paper, the authors push the analysis from individual behavior to the housing market as a whole—and to the prices and rents that follow.
When the Schuylkill swallowed the city: Lessons from Hurricane Ida’s historic flood
New Penn research shows that Hurricane Ida wasn’t a once-in-a-century anomaly but a preview of how climate change, urbanization, and aging infrastructure are rewriting flood risk.
The Fed explained: What it does and why it matters
Former Philadelphia Fed President Patrick Harker and financial historian Peter Conti-Brown, both Wharton professors, unpack the central bank’s origins, its unusual structure, and the quiet ways it shapes the economy
How population changes are impacting primary education worldwide
Research from Penn sociologist Emily Hannum and colleagues reveals regional trends in whether school-age populations are increasing, plateauing, or decreasing—and shows how different countries are responding.
A bioengineered bean gum from the lab of Penn Dental’s Henry Daniell is found to reduce the levels of three microbes associated with head and neck squamous cell cancer to almost zero, without affecting the beneficial bacteria normally found in the mouth.
Fighting oral cancer with bioengineered chewing gum
Research led by Penn Dental’s Henry Daniell shows that antiviral and antibacterial chewing gums reduce the levels of three microbes linked to worse outcomes in oral cancers, paving the way for more effective and affordable therapies.
