The Truth About Current Interest Rates
Phong Truong
The Financial Suit Team - NEXA Mortgage Phong Truong
Published on October 3, 2022

The Truth About Current Interest Rates

You’ve likely heard recent news about rising interest rates. Whether it’s your credit card interest payment, or the cost to finance a home, the cost to borrow money has been increasing. However, while there is no doubt that interest rates are higher than they have been in the past two years, it is important to look at rising interest rates from a broader, more historical point of view.

Mortgage backed securities giant, Freddie Mac has collected and published data on average weekly mortgage interest rates since the early 1970s. With nearly 50 years of data, this snapshot of the rise and fall of mortgage interest rates provides a powerful snapshot of how rates have fluctuated. The biggest take away when you look at rates over the last nearly half-century? Rates are still historically low.

Over the course of the last 49 years, the average interest rate has typically hovered above 5%. Freddie Mac recorded the highest interest rate at 16.63 in 1981. Since then, interest rates have been on a downward slope, with periodic spikes. It wasn’t until the burst of the housing bubble in the mid-2000s, and the subsequent recession, that we saw interest rates fall below 5%. Since then, we have seen interest rates hover at unprecedented lows. As the economy recovered, the Federal Reserve slowly began inching interest rates higher. By 2019, interest rates were ticking closer to the 5% range. However, with the onset of the pandemic, interest rates dramatically dropped again, leading to the extremely low interest rates we experienced through 2020 and 2021.

Where We Are Now?

Over the past few months, we have all felt the impacts of inflation. Prices have increased and whether it’s the total of our weekly groceries to a tank of gas, many goods and services cost more, including the cost to borrow money. However, it is important to keep in mind, that while it may be more expensive to finance a mortgage than it was a year ago, rates are still very low when compared to the historic average. Homebuyers may still have the opportunity to purchase a home at an affordable rate and start building equity.

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Phong Truong
The Financial Suit Team - NEXA Mortgage Phong Truong
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(832) 403-3353