Mortgage rates through the years

Mortgage rates can change from week to week depending on factors like the housing market and economy. Being knowledgeable about mortgage rates and their history could help you decide when to buy. 

There are many mortgage types to choose from, but the 30-year fixed-rate mortgage is the most popular mortgage type, so for rate comparison, we’ll focus on that loan. It allows borrowers to spread payments over a longer term than other loan options. Around 90% of homebuyers choose a 30-year fixed-rate mortgage due to its flexibility and affordability. 

If you are ready to start apply for a 30-year mortgage and see what current rates look like for your situation, talk to a trusted lender today. 

Mortgage rates are not set by one person or group but are determined by many factors, including the Federal Reserve and the housing market. 

While many people think that the Federal Reserve sets interest rates, it only influences them with its policies, which set the rate banks use for lending. Other major contributors toward mortgage rates include inflation, and supply and demand.  

When lenders notice a low demand for mortgages, you may see a decrease in rates in hopes of attracting buyers. When inflation rates rise, mortgage rates tend to increase as a way for lenders to maintain profits. 

While these influence mortgage rates, the exact rate you receive with your loan will depend on your credit history, debt-to-income (DTI) ratio and other factors specific to your financial situation.  

Different loan types can come with different rates. Shorter loans tend to have lower rates as lenders don’t see them as risky as loans with longer terms. A stronger credit history typically means there is less risk when lending you money, leading to lower rates. 

Freddie Mac has kept track of weekly mortgage rates since April 1971. As of August, the average 30-year mortgage rate in the past 54 years is 7.71%. The average doesn’t affect current mortgage rates, but comparing the two could give you an idea of how the market looks now. 

The second week of 2021, Jan. 7-13, saw the lowest all-time mortgage rate for a 30-year fixed-rate mortgage at 2.65%. It is no surprise that the lowest rates occurred during the pandemic as many potential homeowners felt uncertain about making such large investments. In response, mortgage rates were lowered to encourage potential homebuyers. 

The highest interest rate borrowers ever saw was 18.63%. Mortgage rates reached this staggering height the week of Oct. 9-15, 1981. From September to November of that year, mortgage rates stayed above 18%. The interest rates during this time reflected the Great Inflation, which lasted in the U.S. from 1965 to 1983.  

After seeing the all-time highs and lows, you may be happy to know that current mortgage rates sit below the average rate.  

However, the current mortgage rate is subject to change every week. If you are looking to buy a home, make sure you check the current mortgage rate and ask your Loan Officer how it affects your loan. 

The best advice for homebuyers hoping for better rates is not to wait. Mortgage rates are always changing, so if you wait for a better rate, you risk them rising again.  

Instead of waiting, you could get a home mortgage at the current interest rates and refinance your mortgage if rates come down to your desirable amount. 

Are you ready to see how current rates would look with a home mortgage or are you trying to refinance your mortgage to a better rate? Connect with a Loan Officer and see how current mortgage rates look for you! 

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.} 

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