A look at mortgage rates over time
Over the past two years, the simultaneous surge in mortgage rates and home prices has significantly squeezed buyer affordability, creating a challenging “double whammy” effect that has limited the purchasing power of potential homeowners. Will mortgage rates rise or fall? That’s the looming question that has kept many on the edge of their seats.
We’ve seen significant swings in interest rates, from historic lows to sudden surges, all while central banks carefully strategize in response to global events. To put it into perspective, consider the year 2022, which began with the average 30-year fixed rate at a modest 3.22% in January, only to skyrocket to a staggering 7.76% by November 2023.
While the broader trends provide valuable context, it’s important to recognize that average mortgage rates are just a benchmark. Borrowers with healthy credit profiles and strong finances often get mortgage rates well below the industry norm.
So rather than looking only at average rates, check your personalized rates to see what you qualify for.
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Mortgage rates chart for 2022 and 2023
Mortgage interest rates fell to historic lows in 2020 and 2021 during the Covid pandemic. Emergency actions by the Federal Reserve helped push mortgage rates below 3% and kept them there.
The story changed in 2022. With inflation running ultra-hot, mortgage interest rates surged to their highest levels since 2002. According to Freddie Mac’s records, the average 30-year rate jumped from 3.22% in January to a high of 7.08% at the end of October.
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While the anticipation was for mortgage rates to recede in 2023, that wasn’t the case. Throughout this year, the 30-year fixed mortgage rate fluctuated within the range of 6% to 7%. At the outset of September, mortgage rates stood just above 7%, but by November they had climbed to the mid-7% range, as reported by Freddie Mac. This marked the highest rate recorded since the year 2000.
While the Federal Reserve opted to temporarily forgo a rate increase in October, it continues to deliberate the possibility of a rate hike during its upcoming mid-December meeting. If the economic data substantiates the need for another increase, it is highly likely that we will see such a course of action.
Current mortgage interest rates chart
Chart represents weekly averages for a 30-year fixed-rate mortgage. Average for 2022-23 as of December 8, 2023. Source: Freddie Mac PMMS. (c) TheMortgageReports.com
Historical mortgage rates chart
Current rates are more than double their all-time low of 2.65% (reached in January 2021). But if we take a step back and look at rates over the long term, they’re still close to the historic average.
Freddie Mac — the main industry source for mortgage rates — has been keeping records since 1971. Between April 1971 and December 2023, 30-year fixed-rate mortgages averaged 7.74%.
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To understand today’s mortgage rates in context, take a look at where they’ve been throughout history.
Historical 30-year mortgage rates chart
Chart represents weekly averages for a 30-year fixed-rate mortgage. Average for 1971-2023 as of December 8, 2023. Source: Freddie Mac PMMS. (c) TheMortgageReports.com
30-year fixed-rate mortgage 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 |
| 1975 | 9.05% | 1991 | 9.25% | 2007 | 6.34% |
| 1976 | 8.87% | 1992 | 8.39% | 2008 | 6.03% |
| 1977 | 8.85% | 1993 | 7.31% | 2009 | 5.04% |
| 1978 | 9.64% | 1994 | 8.38% | 2010 | 4.69% |
| 1979 | 11.20% | 1995 | 7.93% | 2011 | 4.45% |
| 1980 | 13.74% | 1996 | 7.81% | 2012 | 3.66% |
| 1981 | 16.63% | 1997 | 7.60% | 2013 | 3.98% |
| 1982 | 16.04% | 1998 | 6.94% | 2014 | 4.17% |
| 1983 | 13.24% | 1999 | 7.44% | 2015 | 3.85% |
| 1984 | 13.88% | 2000 | 8.05% | 2016 | 3.65% |
| 1985 | 12.43% | 2001 | 6.97% | 2017 | 3.99% |
| 1986 | 10.19% | 2002 | 6.54% | 2018 | 4.54% |
| 1987 | 10.21% | 2003 | 5.83% | 2019 | 3.94% |
| 1988 | 10.34% | 2004 | 5.84% | 2020 | 3.10% |
| 1989 | 10.32% | 2005 | 5.87% | 2021 | 2.96% |
| 1990 | 10.13% | 2006 | 6.41% | 2022 | 5.34% |
Source: Freddie Mac
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Will mortgage rates go back down?
Extremely high prices and an overall strong economy have led the Federal Reserve to take drastic measures, implementing a rapid succession of rate increases unseen since the early 1980s.
These measures have involved four historic rate hikes of 75 basis points (0.75%), executed in June, July, September, and November of 2022. Although fixed mortgage rates are not controlled by the Fed, their actions have undeniably contributed to a significant upward push in these rates.
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In December 2022, the Federal Reserve made the decision to dial down the pace of interest rate hikes, cutting the fed funds rate by only 50 basis points (0.50%). This trend of dialing back has persisted into 2023, evidenced by four adjustments of 25 basis points (0.25%) in January, March, May, and late July. As a result, the current federal funds rate now sits in a range of 5.25% to 5.50%.
As we reach the end of 2023, forecasting the precise trajectory of mortgage rates has become increasingly difficult. In its most recent forecast, Realtor.com stated it believes mortgage rates will average 6.8% overall in 2024 and reach a low of 6.5% by the end of the year.
Assuming that the Fed holds the Fed Funds rate steady for the first half of 2024 and that 10-year bond yields don’t drop below 4%, we can probably expect rates to decline slowly and steadily, starting the year around 7.0% in Quarter 1, 6.8% in the second quarter, 6.6% in the third quarter, and end the year around 6.4%.
— RICK SHARGA, PRESIDENT & CEO OF CJ PATRICK COMPANY
Many are speculating about where rates will go in the next year or two. Most forecasting models predict that mortgage rates will remain above 6% in 2024, potentially dropping further in 2025. Whether or not the Federal Reserve loosens its monetary policy will play a significant role in determining the direction of interest rates.
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.
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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 payment for a $200,000 mortgage was about $1,200, not including taxes and insurance
Post-2008, rates declined steadily.
2016: An all-time low for mortgage rates
Until recently, 2016 held the lowest annual mortgage rate on record since 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.
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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 payment 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.
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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. The average mortgage rate for that year was 2.96%. That year marked an incredibly appealing homeownership opportunity for first-time homebuyers to enter the housing market. It also resulted in a surge in refinancing activity among existing homeowners.
- At 2.65%, the monthly payment for a $200,000 home loan is $806 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.
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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 7.08% at the end of October. That’s an increase of nearly 400 basis points (4%) in ten months.
As the year concluded, the average mortgage rate went from 2.96% in 2021 to 5.34% in 2022. Although, if the Fed gets inflation in check or the U.S. enters a meaningful recession, mortgage rates could come back down somewhat.
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2023: Mortgage rates and tug-of-war with inflation
As the Federal Reserve continues its battle against inflation and edges closer to reaching its 2% target, mortgage rates have continued to indirectly climb higher. Since the Federal Reserve began its rate hikes in March 2022, the benchmark interest rate has risen 5 percentage points.
According to Freddie Mac’s records, the average 30-year rate reached 6.48% during the initial week of 2023, increasing steadily to eventually land at 7.03% in December.
The question arises: where will mortgage rates ultimately settle next year? Experts predict that the Fed might begin reducing rates next year. This move could alleviate significant upward pressure on mortgage rates, potentially leading to a more substantial rate decline. We’ll have to wait and see if rates breach the much anticipated 6% mark in 2024.
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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 competitive 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.
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Let’s look at some of these factors individually:
Credit score
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.
Down payment
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.
Loan type
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.
Loan term
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 $400,000 home loan with a 30-year fixed rate of 6.5%, you’d pay around $510,381 in total interest over the life of the loan. The same loan size with a 15-year fixed rate of just 6.0% would cost only $207,624 in interest — saving you around $302,757 in total.
Loan amount
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 mortgage lender.
Rates on a jumbo mortgage are normally higher, too, because mortgage lenders have a higher risk of loss. But jumbo loan rates have reversed course and stayed below conforming rates in 2023, creating great deals for jumbo loan borrowers. Currently, a jumbo mortgage is any loan amount over $ in most parts of the U.S.
Discount points
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 $400,000 loan, a discount point would cost $4,000 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.
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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)
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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 that average mortgage rates are only a general benchmark. If you have good credit and strong personal finances, there’s a good chance you’ll get a lower rate than what you see in the news. So check with a lender to see what you qualify for.
