A look at mortgage rates over time
Mortgage rates rose sharply in 2022, surpassing 6% on Sept. 15 for the first time since 2008. Despite recent increases, 30-year mortgage rates are still below their historical average of nearly 8 percent.
Keep in mind that average mortgage rates are just a benchmark. Borrowers with good credit and strong finances often get mortgage rates well below the industry average. So rather than looking only at average rates, it’s worth taking the time to get a personalized estimate and see what you qualify for.
In this article (Skip to...)
- 30-year rate chart
- Historical rate chart
- Average rates since 1972
- Can rates go lower?
- Historical perspective
- What affects your rate
- Other mortgage costs
Mortgage rates chart for 2022
Mortgage interest rates fell to record lows in 2020 and 2021 during the Covid pandemic. Emergency actions by the Federal Reserve helped to push mortgage rates below 3% and keep them there.
But with inflation surging to four-decade highs, mortgage interest rates rose quickly in 2022. And policy tightening by the Fed could push them higher still. Those who are in a position to lock an interest rate sooner rather than later may be wise to do so.
Current mortgage interest rates chart
Chart represents weekly averages for a 30-year fixed-rate mortgage. Average for 2022 as of October 6, 2022. Source: Freddie Mac
Historical mortgage rates chart
Despite recent hikes, today’s 30-year mortgage rates are still below average from a historical perspective.
Freddie Mac, the main industry source for mortgage rates, has been keeping records since 1971. Between Apr. 1971 and Oct. 2022, 30-year fixed-rate mortgages averaged 7.76 percent. So even with the 30-year FRM above 6%, today’s rates are still relatively affordable compared to historical mortgage rates.
Historical 30-year mortgage rates chart
Chart represents weekly averages for a 30-year fixed-rate mortgage. Source: Freddie Mac
Mortgage rate trends over time
For some perspective on today’s mortgage interest rates, here’s how average 30-year rates have changed from year to year over the past five decades.
|Year||Average 30-Year Rate||Year||Average 30-Year Rate||Year||Average 30-Year Rate|
Source: Freddie Mac
Will mortgage rates go back down?
Mortgage rates can rise and fall from week to week. But recent spikes have been far larger than any subsequent drops. For example, the 30-year fixed rate dropped from 6.70% to 6.66% on Oct. 6, but that came after six straight weeks of increases that pushed mortgage rates from 5.13% to nearly 7 percent.
Extremely high prices and an overall strong economy have led the Federal Reserve to take aggressive measures against inflation this year, including three historic rate hikes of 75 basis points (0.75%) each in June, July, and September. Although fixed mortgage rates are not controlled by the Fed, they’ve been spurred significantly higher by its actions.
The Fed is likely to keep hiking interest rates, which could lead to further mortgage rate increases. On the other hand, if the Fed’s actions lead to a recession, that could actually tug mortgage interest rates down. So it’s nearly impossible to accurately predict what will happen to mortgage rates in late 2022.
As a borrower, it doesn’t make much sense to try to time your rate in this market. Our best advice is to buy when you’re financially ready and can afford the home you want — regardless of current interest rates.
Remember that you’re not stuck with your mortgage rate forever. If rates drop significantly, homeowners can always refinance later on to cut costs.
Historic mortgage rates: Important years for rates
The long-term average for mortgage rates is just under 8 percent. That’s according to Freddie Mac records going back to 1971. But mortgage rates can move a lot from year to year. And some years have seen much bigger moves than others.
Let’s look at a few examples to show how rates often buck conventional wisdom and move in unexpected ways.
1981: The all-time high for mortgage rates
1981 was the worst year for mortgage interest rates on record.
How bad is bad? The average mortgage rate in 1981 was 16.63 percent.
- At 16.63% a $200,000 mortgage has a monthly cost for principal and interest of $2,800
- Compared with the long-time average that’s an extra monthly cost of $1,300 or $15,900 per year
And that’s just the average — some people paid more. For the week of Oct. 9, 1981, mortgage rates averaged 18.63%, the highest weekly rate on record, and almost five times the 2019 annual rate.
2008: The mortgage slump
2008 was the final gasp of the mortgage meltdown. Real estate financing was available in 2008 for 6.03% according to Freddie Mac.
- The monthly cost for a $200,000 mortgage was about $1,200 per month, not including taxes and insurance
Post 2008, rates declined steadily.
2016: An all-time low for rates
Until recently, 2016 held the lowest annual mortgage rate on record going back to 1971. Freddie Mac says the typical 2016 mortgage was priced at just 3.65 percent.
- A $200,000 mortgage at 3.65% has a monthly cost for principal and interest of $915
- That’s $553 a month less than the long-term average
Mortgage rates had dropped lower in 2012, when one week in November averaged 3.31 percent. But some of 2012 was higher, and the entire year averaged out at 3.65% for a 30-year mortgage.
2019: The surprise mortgage rate drop-off
In 2018, many economists predicted that 2019 mortgage rates would top 5.5 percent. That turned out to be wrong. In fact, rates dropped in 2019. The average mortgage rate went from 4.54% in 2018 to 3.94% in 2019.
- At 3.94% the monthly cost for a $200,000 home loan was $948
- That’s a savings of $520 a month — or $6,240 a year — when compared with the 8% long–term average
In 2019, it was thought mortgage rates couldn’t go much lower. But 2020 and 2021 proved that thinking wrong again.
2021: The lowest 30-year mortgage rates ever
Rates plummeted in 2020 and 2021 in response to the Coronavirus pandemic. By July 2020, the 30-year fixed rate fell below 3% for the first time. And it kept falling to a new record low of just 2.65% in January 2021.
- At 2.65% the monthly cost for a $200,000 home loan is $806 a month not counting taxes and insurance
- You’d save $662 a month, or $7,900 a year, compared to the 8% long-term average
However, record-low rates were largely dependent on accommodating, Covid-era policies from the Federal Reserve. Those measures were never meant to last. And the more U.S. and world economies recover from their Covid slump, the higher interest rates are likely to go.
2022: Mortgage rates spike
Thanks to sharp inflation growth, higher benchmark rates, and a drawback on mortgage stimulus by the Fed, mortgage rates spiked in 2022.
According to Freddie Mac’s records, the average 30-year rate jumped from 3.22% in January to a high of 6.70% at the end of September. That’s an increase of more than 300 basis points (3%) in nine months. Rates could continue to increase throughout the year. Where they’ll plateau, it’s impossible to say.
Factors that affect your mortgage interest rate
For the average homebuyer, tracking mortgage rates helps reveal trends. But not every borrower will benefit equally from today’s low mortgage rates.
Home loans are personalized to the borrower. Your credit score, down payment, loan type, loan term, and loan amount will affect your mortgage or refinance rate.
It’s also possible to negotiate mortgage rates. Discount points can provide a lower interest rate in exchange for paying cash upfront.
Let’s look at some of these factors individually:
A credit score above 720 will open more doors for low-interest-rate loans, though some loan programs such as USDA, FHA, and VA loans can be available to sub-600 borrowers.
If possible, give yourself a few months or even a year to improve your credit score before borrowing. You could save thousands of dollars through the life of the loan.
Higher down payments can shave your borrowing rate.
Most mortgages, including FHA loans, require at least 3 or 3.5% down. And VA loans and USDA loans are available with zero down payment. But if you can put 10, 15, or even 20% down, you might qualify for a conventional loan with low or no private mortgage insurance and seriously reduce your housing costs.
The type of mortgage loan you use will affect your interest rate. However, your loan type hinges on your credit score. So these two factors are very intertwined.
For example, with a credit score of 580 you may qualify only for a government-backed loan such as an FHA mortgage. FHA loans have low interest rates, but come with mortgage insurance no matter how much money you put down.
A credit score of 620 or higher might qualify you for a conventional loan, and — depending on your down payment and other factors — potentially a lower rate.
Adjustable-rate mortgages traditionally offer lower introductory interest rates compared to a 30-year fixed-rate mortgage. However, those rates are subject to change after the initial fixed-rate period. An initially low ARM rate could rise substantially after 5, 7, or 10 years.
In this post we’ve tracked rates for 30-year fixed-rate mortgages. But 15-year fixed-rate mortgages tend to have even lower borrowing rates.
With a 15-year mortgage, you’d have a higher monthly payment because of the shorter loan term. But throughout the life of the loan you’d save a lot in interest charges.
If you took out a $300,000 home loan with a 30-year fixed rate of 5.5%, you’d pay around $313,000 in total interest over the life of the loan. The same loan size with a 15-year fixed rate of just 5.0% would cost only $127,000 in interest — saving you around $186,000 in total.
Rates on unusually small mortgages — a $50,000 home loan, for example — tend to be higher than average rates because these loans are less profitable to the lender.
Rates on a jumbo mortgage are normally higher, too, because lenders have a higher risk of loss. But jumbo loan rates have reversed course and stayed below conforming rates in 2022, creating great deals for jumbo loan borrowers. Currently, a jumbo mortgage is any loan amount over $ in most parts of the U.S.
A discount point can lower interest rates by about 0.25% in exchange for upfront cash. A discount point costs 1% of the home loan amount.
For a $200,000 loan, a discount point would cost $2,000 upfront. However, the borrower would recoup the upfront cost over time thanks to the savings earned by a lower interest rate.
Since interest payments play out over time, a buyer who plans to sell the home or refinance within a couple of years should probably skip the discount points and pay a higher interest rate for a while.
Some rate quotes assume the home buyer will buy discount points, so be sure to check before closing on the loan.
Other mortgage costs to keep in mind
Remember that your mortgage rate is not the only number that affects your mortgage payment.
When you’re estimating your home buying budget, you also need to account for:
- Down payment
- Closing costs
- Discount points (optional)
- Private mortgage insurance (PMI) or FHA mortgage insurance premiums
- Homeowners insurance
- Property taxes
- HOA dues (if buying in a homeowners association)
When you get pre-approved, you’ll receive a document called a Loan Estimate that lists all these numbers clearly for comparison. You can use your Loan Estimates to find the best overall deal on your mortgage — not just the best interest rate.
You can also use a mortgage calculator with taxes, insurance, and HOA dues included to estimate your total mortgage payment and home buying budget.
When to lock your mortgage rate
Keep an eye on daily rate changes. But if you get a good mortgage rate quote today, don’t hesitate to lock it in.
Remember, if you can secure a 30-year mortgage rate below 7%, you’re paying less than most American homeowners throughout history. That’s not a bad deal.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
2021: The lowest 30-year mortgage rates ever
By July 2020, the 30-year fixed rate fell below 3% for the first time. And it kept falling to a new record low of just 2.65% in January 2021. However, record-low rates were largely dependent on accommodating, Covid-era policies from the Federal Reserve.
What were the highest mortgage rates in history? October 1981 saw 30-year FRM mortgage rates hit their historical peak at 18.45%.Will mortgage interest rates go down in 2023? ›
Despite uncertainties surrounding the Fed's actions and inflation, most housing experts predict mortgage rates will decline to an average of around 5% to 6% in 2023.What will interest rates be in 2023? ›
The best bet is that we continue to see mortgage rates in the ballpark of current levels, perhaps from 6.5% to 7.5%.” Mortgage Bankers Association (MBA): An average of 5.5% at the end of the fourth quarter of 2022 and 5.4% at the end of 2023.Are mortgage rates going to drop? ›
But the upshot for homebuyers is that mortgage rates are expected to come down next year, Fratantoni said. MBA is forecasting mortgage rates to end 2023 at around 5.4%. The average rate for a 30-year fixed rate mortgage is currently 6.94%, according to Freddie Mac.How high could 30-year mortgage rates go? ›
By 2025, the consumers who participated in the survey expect the 30-year mortgage rate to reach 8.2%, which would be the highest since 2000. Some experts see things going the other way. Mortgage giant Fannie Mae predicts that 30-year mortgage rates are going to cool significantly, averaging 4.5% in 2023.Why were mortgage rates so high in the past? ›
Runaway Inflation Kills Housing
The Fed funds rate, which is the rate banks charge each other for overnight loans, hit 20 percent in 1980, and 21 percent in June 1981. The cause was an inflationary spiral brought on by rising oil prices, government overspending and rising wages.
Mortgage costs could go up 30%
The bank makes the assumption that in 2025 and 2026, variable rate loans will cost 4.4 per cent in five years, while fixed rate loans will be slightly higher at 4.5 per cent.
Rates are then expected to remain at around 4.5% until mid-2024. The last time rates were above 4% was in October 2008, at the height of the global economic recession.Will mortgage interest rates go down in 2024? ›
Mortgage interest rates dip not 'likely until 2024'
As a result of the Fed's hikes, real estate markets already impacted by higher mortgage interest rates for several months will unlikely see relief, said Ruben Gonzalez, chief economist at Keller Williams, a property tech real estate company.
Most people expect the interest rate on a 30-year fixed-rate loan to increase to 6.7% next year and reach 8.2% by 2025.What will mortgage rates do in the next 5 years? ›
As for the monetary policy rate, mortgage rates are expected to increase further. We now predict that the conventional 5-year (fixed) mortgage rate will increase and peak at 6% in Q4 2022, a significant rise from its historical low of 3.2% in Q3 2021.Will interest rates continue to climb in 2023? ›
In short, expect short-term interest rates to rise above five percent next year, with long-term rates, such as mortgages, even higher.Where will mortgage rates go in 2023? ›
(NWSA).) Mortgage rates will go back down to 5.75% by the end of 2023, the Capital Economics researchers forecast in the report.How high will interest rates go in 2022? ›
Fed Chair Jerome Powell signaled officials will likely take interest rates even higher than the 4.5-4.75 percent they initially projected in September, but might take smaller steps to get there. That could mean rate hikes worth a slower half a percentage point — and eventually a quarter point.Will interest rates fall in 2022? ›
Mortgage rates could decrease next week (Nov. 7-11, 2022) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders continue to account for Federal Reserve taking continued aggressive measures to counteract the high inflation of 2022.How high will 30 year interest rates go in 2022? ›
(To be sure, 43 percent of economists in a recent survey by Bankrate believe we're not out of the woods in terms of inflationary pressure.) For November, McBride forecasts rates to reach 7 percent to 7.25 percent for a 30-year mortgage and between 6.2 percent and 6.4 percent for a 15-year loan.Will mortgage rates go down in 2025? ›
According to interest-rate predictions from algorithm-based forecasting service Longforecast, the 30-year-mortgage rate in the US, which is strongly linked to the base rate set by the Fed, was projected to hit between 14.02% and 14.88% in January 2025, a big mark-up on current rates of about 6.9%.Will mortgage rates rise in 2024? ›
"[According to our forecasts] average interest rates on the stock of outstanding mortgages peak at 5% in the second half of 2024, the highest since 2008 and 1.8 percentage points above the peak in our March forecast, before falling back slightly to 4.6% by the forecast horizon.What will mortgage rates be at the end of 2022? ›
Expect 2022 To Close With Rates in the Low 8s to High 9s
“Given the trajectory of mortgage rates over the last several months, we are anticipating rates to reach the low 8s by the end of this year,” said Christina McCollum, Washington regional manager for Churchill Mortgage.
As inflation increases, so does the price of everything, including mortgage rates." Inflation also reduces the demand that investors have for mortgage-backed bonds. As demand drops, the prices of mortgage-backed securities fall. That results in higher interest rates for all mortgage types.What was the highest interest rate in US history? ›
Interest Rate in the United States averaged 5.42 percent from 1971 until 2022, reaching an all time high of 20.00 percent in March of 1980 and a record low of 0.25 percent in December of 2008.What is the lowest that mortgage rates have ever been? ›
Mortgage rates dropped to a record low of 3.35% in November 2012. To put it into perspective, the monthly payment for a $100,000 loan at the historical peak rate of 18.45% in 1981 was $1,544, compared to $441 at a much lower rate of 3.35% in 2012.What is the historical average 30 year mortgage rate? ›
30 Year Mortgage Rate in the United States averaged 7.76 percent from 1971 until 2022, reaching an all time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021.What was the 30 year mortgage rate in 1990? ›
Yearly Average Mortgage Rates:
1990 10.31% 1995 9.13% 2000 8.25% 2005 5.66%
The last time the average rate was above 7 percent was April 2002, a time when the U.S. was still reeling from the Sept. 11 terrorist attacks, but six years away from the 2008 housing market collapse that triggered the Great Recession.Will mortgage rates go down ever again? ›
But the upshot for homebuyers is that mortgage rates are expected to come down next year, Fratantoni said. MBA is forecasting mortgage rates to end 2023 at around 5.4%. The average rate for a 30-year fixed rate mortgage is currently 6.94%, according to Freddie Mac.Will home rates ever go down? ›
Mortgage rates may continue to rise in 2022. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher this year. However, if a serious recession comes on, we could potentially see a dip in mortgage rates.Will the interest rate go down in 2022? ›
If spreads gradually return closer to historical averages, then mortgage rates will decline modestly over the next year. This is reflected in our forecast which has rates dropping from an average of 6.8% in the fourth quarter of 2022 to 6.2% in the fourth quarter of 2023.Why were mortgage rates so high 80s? ›
As we headed into the 80s, it's important to note that the country was in the middle of a recession, largely caused by the oil crises of 1973 and 1979. The second oil shock caused skyrocketing inflation. The cost of goods and services rose, so fittingly, mortgage rates did too.
While the recent hikes are jarring, it's actually nothing compared to rates back in the 1980s. In September 1981, a 30-year fixed-rate mortgage was at a double-digit high of 19%.What was 30 year mortgage rate in 1994? ›
|1994||30 Year FRM||15 Year FRM|
|FOMC Meeting Date||Rate Change (bps)||Federal Funds Rate|
|Nov 2, 2022||+75||3.75% to 4.00%|
|Sept 21, 2022||+75||3.00% to 3.25%|
|July 27, 2022||+75||2.25% to 2.5%|
|June 16, 2022||+75||1.5% to 1.75%|
The subprime mortgage crisis of 2007–10 stemmed from an earlier expansion of mortgage credit, including to borrowers who previously would have had difficulty getting mortgages, which both contributed to and was facilitated by rapidly rising home prices.What is a good interest rate on a house? ›
Mortgage rates change all the time. So a good mortgage rate could look drastically different from one day to the next. Right now, good mortgage rates for a 15-year fixed loan start in the 5% range, while good rates for a 30-year mortgage generally start in the 6% range.