Is this why 3.6 million ready homeowners aren’t selling in 2014?

One in three current mortgage holders have a rate below 4%

As home price appreciation has slowed dramatically, normally it would be a good time for homeowners looking to relocate, upsize or downsize. However, there’s a new problem many are facing. 

That problem is that doing so, for many homeowners, would mean surrendering a dynamite mortgage interest rate, which means even if the home they want to buy is about the same price or just a little more, they could end up paying much more per month.

Corelogic (CLGX), among others, puts the figure of homeowners unwilling to sell because of higher interest rates at as high as 3.6 million.

Interest rates have been ticking up slowly since the middle of 2013 with a few stops and declines, but overall rates are higher and rising.

The average rate on a 30-year mortgage fell below 4% toward the end of 2011 and reached a historic low of 3.3% in November 2012.

Rates on a 30-year fixed did not rise above 4% until June 2013, and in the interim homeowners and buyers went on a purchase and refi spree.

Today, almost one in three active residential mortgages has a rate below 4%, according to a HousingWire survey of data from a number of housing information services.

Rates this last week for a 30-year averaged 4.13%, which reflects a recent, mild softening, but still part of the gradual trend of rising. Bankrate, incidentally, has the average at 4.3% for the week.

With this serving as a disincentive for otherwise qualified, motivated borrowers, it contributes to the spiral or rising affordability gaps (and hence, sluggish sales) since it has a negative impact on the available housing inventory.

Coupled with the decline in new construction and the shrinking pool of distressed properties, it’s a recipe for a really tight inventory.

Just last week, FNC Inc.’s home price index, separate from other commonly cited numbers from sources like the National Association of Realtors or Black Knight, shows that home sales nationwide picked up momentum entering the summer months.

The latest numbers from FNC — as of May — indicate U.S. home prices are rising at a faster pace than at the start of 2014.

Constructed to gauge the price movement among normal home sales by excluding distressed properties, the index rose 1% from April to May.

On a year-over-year basis, the rate of home-price appreciation across the nation slowed by 1% to 2% when compared to the first quarter.

This combination of rising prices and shrinking inventory is one of the reasons the housing recovery is coming to a halt.