The Golden Handcuffs. It’s not the worst living situation to be in if you don’t need to move and you like your home. The person who wears these handcuffs refinanced their mortgage at something like 3% when COVID-19 arrived in March 2020. Staying in place and servicing a low-rate mortgage is a great situation if moving to another house is of no urgency. But for those who want out, the changed payment math is ugly.

Let’s say that “several years before COVID-19,” a person bought a $400,000 house. When they refinanced during COVID-19’s initial arrival, the mortgage balance was $250,000. Locking in a 30-year term at 3%, their monthly principal and interest is $1,054.

Because the house was $400,000 “several years prior to COVID-19,” say it can now fetch $600,000—and that the mortgage balance is $225,000.

This person wears the Golden Handcuffs. Only extraordinary circumstances—the job offer in the other city is The Dream Job, or the dwelling is just too tiny for a growing family—can they really even consider moving. The math is too harrowing.

If this person sells the current house for $600,000 and puts all $375,000 in equity down on a different $600,000 house in another city, the resulting mortgage payment on a $225,000 loan at 6.35% is $1,400. Recall that the existing situation has a monthly payment of $1,054. Also, we have said nothing about closing costs, realtor fees, moving crews and all the other expenses associated with buying and selling homes. Additionally, if one house is $600,000 and another house is also $600,000, that probably isn’t doing much of a service to the scenario that has the growing family looking for more space.

What’s more, the payment that jumps 33% will run for a fresh 30 years, whereas the COVID-19 refi had less than 27 years left on it. There is another part, too: if they do move, the principal versus interest dynamic is upended. For the house they have been in all these years, the next payment for June consists of $471.71 in principal and $582.30 for interest. Taking the job in the other city, the new mortgage applies just $209.41 to the principal, with $1,190.63 in interest.

Because of the handcuffs, this person may not even apply for the job in the first place. Again, unless it’s The Dream Job, the golden handcuffs keep them right where they are.

As the years tick by, the amortization math of the 3% mortgage causes home equity to jump handsomely each month. If they can advance their career while staying in place, the golden handcuffs may be the best financial accident to ever happen to them.

Those who are in limbo, locked out, are the renters. Unbound by the golden handcuffs, this cohort can move around, but that’s about the only benefit. At current home prices and rates, the numbers are a shock. Redfin reports that the median mortgage payment in April was $2,555, not even close to the sub-$1,500 payment for people who bought at almost any time in the year 2020. Wages have jumped, but they haven’t jumped that much.

Golden handcuff sellers can’t sell, and in-limbo renters can’t buy. The difference: one cohort is “accidentally” building a retirement nest egg; the other is in a cold sweat. It bodes very poorly for social cohesion. We are stuck in a housing boondoggle, and we aren’t sure how it unwinds absent someone finding a key for the handcuffs. That key: something like a “4-handle” on mortgage rates.