The Golden Handcuffs

by Rob Luck

Over the past few years, a phrase has quietly worked its way into real estate conversations: the golden handcuffs.

It sounds positive. After all, who wouldn’t want to be “handcuffed” to a historically low mortgage rate?

But for many homeowners, that low rate has become less of a blessing and more of a constraint.

What are the “golden handcuffs”?

Between 2020 and early 2022, millions of homeowners either purchased or refinanced their homes at ultra low interest rates. For some, rates started with a “2”. Those loans dramatically reduced monthly payments and made long term budgeting easier.

Fast forward a few years.

Life has continued to move. Families have grown. Job situations have changed. Health needs, lifestyle goals, and financial priorities have evolved. Yet many homeowners feel stuck because selling their home means giving up a low rate and replacing it with a higher one.

That emotional and financial tension is what people mean by the golden handcuffs. The home still works on paper, but no longer works in real life.

Why the lock in effect became so powerful

When mortgage rates climbed sharply starting in May 2022, the math changed overnight. Even homeowners with significant equity hesitated to move because:

A higher interest rate meant a higher monthly payment, even if the next home was similarly priced
Downsizing did not always feel like savings once financing was factored in
Moving up felt financially irresponsible, even when it made sense personally

This created what many called the lock in effect. Inventory tightened because homeowners chose to stay put, even when they wanted or needed to move.

What is different now?

Recently, rates have come down from their peaks. While they are not back to pandemic lows, the direction matters. Quick note: we’ll likely never see those ‘pandemic lows’ again. After all, we had never seen them before.

However, rates have now eased, and buyer activity has picked up quickly. Mortgage demand has surged, and the early part of the 2026 buying season is off to a strong start. At the same time, signs suggest that the lock in effect is loosening its grip. More homeowners are at least willing to explore options instead of immediately shutting the door.

This does not mean rates are “perfect”. It means movement is happening again.

And that matters.

The biggest mistake is trying to time the market

One of the most common traps I see is waiting for the perfect moment. The perfect rate. The perfect market. The perfect headline. Don’t get me wrong - everyone wants a “deal” - I’m right there with you.

However, historically, those moments only become obvious in hindsight.

Real estate decisions work best when they are driven by clear reasons, not predictions. The question should not be “Will rates drop another half percent?” The question should be:

Does this home still fit my life?
Does staying put help or hurt my long term goals?
Can a move improve my quality of life, even if the financing looks different?
What does the full financial picture actually look like, not just the rate?

Rates matter. Budgets matter. But they are only part of the equation.

Smart moves are planned moves

Breaking free from the golden handcuffs does not mean being reckless. It means being informed.

For some homeowners, staying put still makes the most sense. For others, a move that once felt impossible is now feasible with the right strategy. That strategy might include:

Using equity more effectively
Exploring different price points or locations
Adjusting timelines to line up a sale and purchase cleanly
Understanding true monthly costs instead of assuming the worst

This is where accurate information makes all the difference. Assumptions can keep people frozen. Real numbers create options.

Buyers are part of this story too

This dynamic does not only affect sellers. Buyers waiting on the sidelines for “the right time” face the same risk. When activity increases, competition increases. When competition increases, prices and pressure follow.

Waiting for perfection often means missing opportunity.

The bottom line

The golden handcuffs are real. Ultra-low rates created comfort, but comfort can quietly turn into limitation if your circumstances have changed in recent years. No one should feel forced to stay in a home they have outgrown, outlived, or outlasted.

At the same time, moving should always be intentional and strategic. Now more than ever, this is not a situation to take lightly.

The goal is not to chase the market. The goal is to make decisions based on clear reasons, realistic budgets, and reliable data.