Portable Mortgages Could Unlock Inventory - and the Math Explains Why

Homeowners who secured pandemic-era mortgage rates have a clear reason to stay put: moving would add roughly $1 million in interest over the life of a 30-year loan. Proposed legislation to let borrowers carry those low rates to new properties has drawn congressional attention, and the financial mechanics of unwinding mortgage-backed securities will shape how far it can go.

How the Rate Gap Shapes Seller Decisions

Scott Spelker, an agent with Coldwell Banker Realty in Morris County, New Jersey, lays out the math directly. On a $1 million mortgage at 2.75%, the monthly payment runs approximately $4,000 in principal and interest. At today’s rate of roughly 6.5%, that same loan costs about $6,500 per month – a difference of $2,500 monthly, or about 60% more.

Over the full term, the divergence widens further. According to Spelker, a $1 million mortgage at 2.75% generates approximately $400,000 in total interest over 30 years. At 6.5%, that figure climbs to roughly $1.4 million – nearly $1 million more on the same principal.

That financial reality is a primary driver of the tight inventory in markets like his. Homeowners who locked in rates between roughly 2.25% and 2.75% have strong reason to hold onto them rather than repurchase at current rates. Spelker says several former clients have told him directly they would list their homes if they could take their mortgage with them. Some are instead exploring additions or construction loans – investing in the homes they already love rather than moving.

Understanding the Move Act’s Path Forward

The Move Act, introduced by a New Jersey congressman, would allow homeowners to port their existing mortgages to new properties. Spelker had previously estimated the odds of such legislation passing at roughly 50-50. After the bill’s introduction, he revised that estimate to about 10%, based on the practical work still to be done.

The central question, in Spelker’s view, is operational feasibility rather than political will. Most residential mortgages are packaged into mortgage-backed securities and sold to Fannie Mae or Freddie Mac. Once a loan is bundled into a security, extracting it and continuing it at its original rate raises accounting and risk management questions that would need to be solved for the idea to work.

“Logistically, it’s really tough because these bonds are usually sold, are packaged, and it’s hard to just kind of pull that thread and take that one mortgage out of there and continue it at the same rate,” Spelker says. He acknowledges that smart people may find a solution but adds: “I put this thing at like 10% chance of it happening.”

What Passage Could Mean for Buyers

Even setting aside implementation questions, Spelker sees portable mortgages as one factor among many in housing affordability. The policy’s primary beneficiaries would be existing homeowners with low rates, and first-time buyers would benefit more indirectly.

The mechanism for helping entry-level buyers works through the market: if trade-up buyers list their current homes, those properties become available at more accessible prices. Spelker says more homes on the market would be a good thing for people starting out, while noting the effect would build gradually rather than transform buyer expectations overnight.

“I don’t know that it’s enough of an impact that all of a sudden the curtain drops and everybody goes, oh my God, there’s so many houses, we can afford it now, and everything’s hunky dory,” Spelker says.

He also notes that the policy’s impact would vary by region. In markets like Austin and Dallas-Fort Worth, where new construction has already produced ample supply, portable mortgages would add velocity to an already-moving market. In supply-focused commuter corridors like Morris County, New Jersey – where towns sit along a single train line into Manhattan and inventory reflects geography and historical development patterns – the effect would likely be more measured.

Spelker points to his own market as an example. Madison, New Jersey, currently has about 14 properties listed for sale. He says he has tracked sales data back to 2005 and found the town consistently recorded 180 to 190 sales per year in the mid-2000s. In recent years, that number has settled at roughly 120 to 130 – about 50 fewer transactions annually. Where the town’s active listings once regularly reached 38 or more, Spelker says the count has stayed at or below 20 this year.

When properties are priced correctly in this environment, they move fast. Spelker says homes listed on a Thursday routinely receive highest-and-best deadlines by the following Tuesday – five days. One listing this year drew 41 offers. His brother’s home received 20 offers and sold 49% over asking.

For sellers weighing whether to wait for portable mortgage legislation before listing, those numbers show the current market is already producing strong outcomes for well-prepared properties – with or without a policy change.

How Agents Would Respond If the Policy Passed

Spelker says he would treat portable mortgage legislation as a major business opportunity. His plan would be to reach out to former clients by phone, email, and direct mail, focusing on those who have previously indicated they would consider trading up if their mortgage were portable. He would also use social media and mailers aimed at the broader public.

“I think that would have a huge impact on people’s willingness to come sit down and talk,” Spelker says – whether to discuss trading up to a different house or moving out of the area entirely.

For now, the legislation exists as a proposal, and the financial incentive it addresses is real and measurable. Whether the securitization system can be restructured to support it is, in Spelker’s words, something he will believe when he sees it. In the meantime, The Spelker Team continues to guide Madison and Morris County New Jersey homeowners through today’s market with clear numbers and steady advice.

The Spelker Team, Scott and Amy Spelker, are real estate agents at Coldwell Banker Realty in Madison, NJ, consistently ranked among the top producers in their office. Scott is also Madison’s Town Historian.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.