Opinion: San Diego should lead the way on mortgage portability

San Diego’s housing market is lagging near the bottom of national rankings on home price gains  — a clear sign that our current housing policies are failing, especially for homeowners who would like to sell. Not because they don’t want to sell, but because they can’t afford to.

More than 80% of homeowners in America hold a mortgage rate below 5%. And many homeowners have interest rates as low as 2%. For San Diego home sellers, moving today would mean giving up their low mortgage interest rate and taking on a mortgage rate that in some cases would be double what they currently have.

For families, older adults on fixed incomes and workers who need to relocate, the math simply doesn’t add up. This “golden handcuff” effect is stifling our housing inventory as homeowners are reluctant to lose their low interest rates unless situations leave them no choice.

This trend has pushed up home prices, helping to make San Diego one of the least affordable cities in the nation. The most talked-about solution is simply to build more homes. But to do this our elected leaders would need to help make building more affordable by further streamlining the permitting process, reducing or waiving excessive permit fees, encouraging innovative construction methods and encouraging creative home financing options.

However, that has not happened yet, and the cost of living in San Diego continues to increase. Parking meters are being added to our public parks. Water rates continue to climb. A new trash collection fee on more than 200,000 homes, which was pitched to voters as a modest cost-recovery measure, will be much higher than forecast at nearly $44 a month. And the city spends about $235 million on homelessness-related programs each year with dismal results. 

Although some efforts to increase our housing inventory are making progress, the vast majority of units being built are rentals, not “for sale” single-family homes or condos. Since 1980, San Diego County’s population has grown dramatically from around 1.86 million to over 3.25 million, a 75% increase. Simply stated, the San Diego region has failed to build enough homes to keep up with our population increase. 

But there is a solution that no one in San Diego government is talking about: Allow homeowners to carry their existing interest rates with them when they buy their next home. Other countries, including Canada, and the U.K., already allow some version of “mortgage portability,” where homeowners can transfer their current interest rate to a new property.  

One of the reasons we have not allowed this in the United States is because in our system, mortgages are bundled into securities, bought and sold, and the rate is “locked” in place. That’s great for Wall Street, but terrible for the everyday people who want to buy or sell a home.

Imagine if homeowners in San Diego could keep their low interest rate when they buy their next home. The inventory would open up almost overnight. Older adults could downsize. Families could move into better-suited homes. Employees could take jobs without fearing skyrocketing payments. And first-time homebuyers would finally have options as more homes hit the market.

Mortgage portability isn’t a handout — it is economic mobility, family mobility and workforce mobility. The real question is this: Why aren’t our policymakers pushing for it? At a time when cities like San Diego face historic affordability challenges, we need fresh thinking, not the same tired talking points.

Allowing homeowners to keep their mortgage rate when they move is a practical step that would help thousands of families without costing taxpayers a dime.

It’s time for a national conversation about mortgage portability, and San Diego officials should be leading it. Our residents deserve a housing system that rewards responsibility, supports mobility and reflects the economic realities of today.

Giving homeowners the ability to carry their mortgage rate to their next home isn’t just smart policy. It’s common sense. And San Diego should be the place where this conversation begins. 

Powell is the former vice president for the San Diego Association of Realtors and a former San Diego County Board of Education member. He lives in San Diego.