Mortgage Rates: A Historical Perspective

Mortgage rates are a crucial factor in the decisions of homebuyers, yet few take the historical perspective into account when making those decisions. By understanding the trends and patterns of mortgage rates over time, you can make informed choices about your home buying prospects.

The Early Years (1971-1995)

During the early years of mortgage rates (1971-1995), rates were consistently high, due in large part to a struggling economy. In 1981, rates peaked at 18.63%, which made home ownership challenging for many Americans.

The Boom Years (1996-2005)

The boom years of mortgage rates (1996-2005) saw a significant reduction in rates, with the average rate falling below 7%. Due in part to regulations like the Community Reinvestment Act, lending institutions became more lenient with their lending standards, which led to an increase in homeownership across the country.

The Bursting Bubble (2006-2009)

However, this bubble burst in the late 2000s, leading to a recession that saw a significant decline in home values and an increase in foreclosures. Mortgage rates hit historic lows in 2012, with the average rate falling below 4% for a 30-year fixed-rate mortgage.

Post-Recession (2010-2021)

Today, post-recession mortgage rates (2010-2021) remain relatively low, but recent years have shown an uptick in interest rates, with the average rate now hovering around 3.5-4%. As the economy recovers, many experts predict that mortgage rates may rise to levels closer to those seen in the early years of the mortgage industry.