Skip to main content

At InterBank, we understand the importance of making informed decisions about homeownership and refinancing. As we examine the history of mortgage rates from the 1970s to the present, and look ahead into 2024, it’s clear that understanding historical trends is key to appreciating the current rate environment.

A Century of Change

The journey of homeownership in America has seen a dramatic transformation since the introduction of the 30-year fixed-rate mortgage during the Great Depression. This innovation made homeownership accessible for millions, setting the stage for the mortgage rate trends we observe today.

Decades of Fluctuation

From the high inflationary period of the 1970s, with mortgage rates starting at about 7.3 percent and peaking at 12.9 percent by the decade’s end, to the pinnacle of 18.4 percent in October 1981 during the Great Inflation, mortgage rates have experienced significant volatility. Each decade brought its own economic challenges and milestones, influencing the direction of mortgage rates:

  • The 1980s saw rates starting to stabilize towards the end of the decade after reaching historic highs.
  • The 1990s experienced a significant drop in rates, influenced by the dot-com bubble and a shift towards fixed-income investments.
  • The 2000s were marked by the housing market crash and the Federal Reserve’s quantitative easing measures, which saw rates decrease further.
  • The 2010s continued the trend of low rates, with the Federal Reserve’s changing policies on bond-buying playing a role.

The 2020s: A New Era

The onset of the 2020s brought unprecedented lows for mortgage rates, diving to just under 3 percent amid the pandemic. However, as the world adjusted, rates began to rise once again, with the Federal Reserve’s actions to curb inflation leading to rates breaching 7 percent in October 2022 and peaking above 8 percent in October 2023. As of early 2024, we see rates stabilizing around 7.05 percent, reflecting the ongoing economic adjustments.

What This Means for Homebuyers and Homeowners

The cyclical nature of the economy means that mortgage rates will continue to fluctuate. However, it’s crucial to focus on what you can control, such as maintaining a good credit score, stable income, and a sizable down payment, to qualify for the best rates possible. For those considering refinancing, it’s generally advisable to do so if you can significantly lower your rate and plan to stay in your home long enough to recoup the costs.

Looking Ahead

While predicting the future of mortgage rates is challenging, staying informed through regular updates and expert forecasts can help you make more educated decisions whether you’re buying a new home or refinancing your current mortgage.

At InterBank, we’re committed to helping our clients navigate the complexities of mortgage rates with confidence. Remember, a home is not just an investment; it’s a place to live your life. Making decisions based on both your financial situation and personal readiness will always be the best strategy.