January Divorce Spikes Complicated By 7% Mortgage Rates

High mortgage rates are complicating typical January spikes in divorce rates as couples navigate affordability while spitting up.
“Divorce Monday,” the first Monday of the new year, is notorious for divorce filings in the wake of relationship-killing holiday quarrels.
“Many couples often see the Christmas period as the final straw in their relationship,” Alberta Tevie, a consultant solicitor at the law firm Richard Nelson, told the Daily Mail.
But the tight housing market is making divorce even more traumatic for couples who own a home together. When married couples buy homes, they often both sign the mortgage – making them both responsible for payments.
If one spouse wants to keep the house, the ideal answer is typically to refinance in their name. However, people who have historically low interest rates locked in from the pandemic lending era might not want to commit to today’s 7% rates.
In Q3 2024, 83% of outstanding mortgages in the U.S. had a rate below 6%. Just under a quarter had rates below 3%.
Homeowners with assumable mortgages may be able to avoid this problem, but not every loan is eligible.
Selling the house and splitting the profits leads to both parties in the market for a new place to live, a problem while home prices and rents are at record highs.
As a result, some homeowners may be reluctantly swayed into staying together in the hopes of avoiding major financial trouble.