What’s the alternative that’s better? Having a 5/1 or 1/1 ARM just means that your current house’s mortgage would also be more expensive because your 3% mortgage would have adjusted upward by now.
If you’re willing to have your current mortgage be more expensive to avoid the “downside of being locked into a low payment, you could just pretend your mortgage had adjusted and go buy a house that suits your needs better.
Aren't most people who are "locked into house" a seller that's removed from the market, but also a buyer that's removed from the market?
I can see how someone who decides to keep their current house to use as a rental and buy a new owner-occupied property would tend to increase house purchase prices slightly (but also increase rental availability and lower rent prices slightly), but also think that’s a tiny minority of current homeowners.
