Portable mortgages explained: What they are and how they work

Federal Housing Finance Agency Director Bill Pulte said the government agency is “actively evaluating” portable mortgages, which would allow a homeowner to transfer their loan from their current home to a new home when they move. 

With portable mortgages, the homeowner would effectively be able to keep their existing interest rate and terms instead of paying off the loan and getting a new one. It’s a strategy designed to inject movement into a stagnant housing market. Many homeowners and would-be buyers have remained on the sidelines because they are reluctant to trade their sub-3% mortgage rates for today’s loans hovering around 6.5%. 

Realtor.com senior economist Jake Krimmel told FOX Business that these types of mortgages aren’t compatible with the architecture of U.S. mortgage finance nor would they fix the broader affordability problems facing the housing market today if they were.

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Krimmel called Pulte’s proposal “a brute-force attempt to ‘solve’ the lock-in effect.” 

When a typical homeowner moves today, they typically have to prepay their existing loan and take out a new one at prevailing rates. Theoretically, Krimmel said that if that rate gap was the only thing holding back mobility, portable mortgages might unlock some activity and free up inventory.

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However, Krimmel pointed to a May 2025 Federal Reserve report that revealed how the lock-in effect only explained about half of the recent decline in mobility. 

“It’s not clear portability would bring sales back to normal levels,” Krimmel said, adding that the benefits of a portable mortgage would also “be highly selective.” 

With portable mortgages, Krimmel said only current mortgage holders with low rates would benefit, while renters and homeowners without a mortgage would still face today’s rates.

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But feasibility, he said, is the bigger issue.

“The U.S. mortgage system is built on securitization, where loans are pooled and priced based on the specific property backing them,” Krimmel said. “Mortgages must be tied to the home where they originated, so investors can assess collateral risk.” 

If a mortgage became portable, the “collateral (and therefore the risk profile of the entire pool) would change midstream,” which would break the logic of securitization. They would also throw off models used to predict how fast homeowners pay off their mortgage and how long those loans last, both of which are key to valuing mortgage-backed securities.

If moving no longer requires buyers to pay their current mortgage, the duration of these loans “would extend sharply and unpredictably,” according to Krimmel. Investors would therefore demand higher compensation for that extension risk, which would push “mortgage rates higher, first abruptly and then structurally through wider spreads over the 10-year Treasury.” 

The issues extend beyond that too. For instance, Krimmel said origination and servicing would become far more complex because the lien, escrow, taxes and title obligations all depend on the specific property.

“Overall, portable mortgages might seem like a good way to mitigate the lock-in effect – a niche issue unique to current market conditions; but widespread implementation would introduce thorny technical problems and significant unintended consequences – many of them worse than the issue they’re trying to solve,” he said.