Historical mortgage rates: 1971 to the present

When looking at current mortgage rates, it’s natural to wonder how they stack up historically. Freddie Mac is a government sponsored entity created to provide liquidity and stability to the U.S. mortgage market. They’ve tracked average mortgage rates going back to 1971.

30-year fixed mortgage rates over time

Freddie Mac was founded by congress in 1970 and began tracking 30-year fixed-rate mortgage rates in April 1971. This chart shows the 30-year fixed rate mortgage average by year.

You’ll notice the highest annual rate came in 1981, peaking at 16.64%. The lowest came in 2021 at 2.96%..You’ll also see that while current interest rates are higher than in recent years, they’re still lower than they were for almost all of the 70s, 80s and 90s.

Historical mortgage rates by decade

Now that you’ve seen the raw data, let’s dive into the details, trends and the reasons behind the numbers.

1970s

• Lowest: 7.38% in 1972
• Highest: 11.20% in 1979

Rates crept higher throughout the 1970s. They briefly dipped into the middle to high 8% range before peaking in 1979. This was during a period of high inflation that would continue into the next decade.

It’s worth noting that one of the primary functions for the Federal Reserve (sometimes shortened to “the Fed”) as the central U.S. bank is to combat inflation. The steps they take to do so both directly and indirectly affect mortgage rates.

1980s

• Lowest: 10.19% in 1986
• Highest: 16.64% in 1981

In both the 1970s and 1980s, the United States experienced a recession caused by an oil embargo against the country. The Organization of the Petroleum Exporting Countries (OPEC) instituted the embargo. One of the effects of this was hyperinflation, which meant the price of goods and services rose extremely fast.

To counteract hyperinflation, the Fed raised short-term interest rates. This made money in savings accounts worth more. On the other hand, all interest rates rose, so the cost of borrowing money also increased.

Interest rates reached their highest point in modern history in 1981 when the average rate was 16.64%, according to the Freddie Mac data. Fixed mortgage rates declined from there, but they finished the decade at around 10%. The 1980s were an expensive time to borrow money.

1990s

• Lowest: 6.94% in 1998
• Highest: 10.13% in 1990

In the 1990s, inflation started to calm down a bit. The average mortgage rate in 1990 was 10.13%, but it slowly fell, finally dipping to 6.94% in 1998.

One big reason for the economic growth and declining inflation seen later in the decade was the arrival of the internet in mainstream consciousness. The increased investment in research and development of new technologies spurred significant economic growth.

2000s

• Lowest: 5.04% in 2009
• Highest: 8.05% in 2000

Mortgage rates steadily declined from 8.05% in 2000 to the high 5% range in 2003. But the housing industry growth fueled by these attractive rates was short-lived. In 2008, the economy crashed, bringing the real estate market with it, and the Great Recession began.

The housing crash continued to worsen as property values steeply declined. This left many homeowners owing more on their homes than the property was worth – a condition known as being underwater on a mortgage. To provide some relief and stimulate the economy, the Fed cut interest rates to make borrowing money cheaper.

Short-term rates, or the rates at which financial institutions borrow money, ended up being slashed to the point where they were at or near zero. This made it extremely cheap for banks to borrow funds so they could keep mortgage rates low.

As a result of this change, mortgage rates fell almost a full percentage point, averaging 5.04% in 2009.

2010s

• Lowest: 3.65% in 2016
• Highest: 4.69% in 2010

Riding the wave of low bank borrowing costs, mortgage rates entered the new decade at around 4.69%. They continued to fall steadily and were around 3.66% by 2012. In 2013, rates rose to 3.98% on average due in large part to the bond market, which panicked when the Federal Reserve announced plans to stop buying as many bonds.

When fewer home buyers are available, the yields on mortgage bonds must go up to attract purchasers. This also causes mortgage rates to rise. Rates increased to an average of 4.17% in 2014 and dropped to an average of 3.85% in 2015 as the market calmed down.

Although they were a little higher to end the year, rates in 2016 averaged 3.65%. With global turmoil, investors flocked to the safety of the U.S. bond market to guarantee the steadiness of their investments.

Rates began rising after the 2016 presidential election and peaked at the end of 2018 and the start of 2019. Rates on 30-year fixed-rate mortgages typically ranged between 3.49% on the low end and 4.94% on the high end.

2020 – present

• Lowest: 2.96% in 2021
• Highest: 6.81% in 2023

Rates declined throughout 2019. When January 2020 came around, the average rate for a 30-year fixed-rate mortgage was about 3.11%.

In response to the COVID-19 pandemic, the Fed dropped the federal funds rate to 0% – 0.25%, causing other short-term and long-term rates to drop.

This move was made to encourage borrowing of home loans and other loan types. It also led to a large increase in refinance and mortgage applications. By December 2020, Freddie Mac reported the average mortgage rate for a 30-year home loan was 2.68%.

Mortgage rates then hovered within the same range throughout 2021, but since March 2022, the Fed has been raising its rates to reduce the amount of money in the economy. The average mortgage interest rate for a 30-year fixed-rate mortgage was above 6% throughout 2023, soaring above 7% in mid-August.

At the Federal Reserve meeting in September of 2024, interest rates were cut back for the first time in four years due to inroads made in curbing inflation. This had led to a drop in mortgage rates as of October, 2024.

How historical mortgage rates affect home purchases

Lower mortgage interest rates encourage home buying. Low rates mean you’ll pay less money in interest over the life of the loan and have a lower monthly mortgage payment.

Mortgage lenders determine how much you can borrow by comparing your income to your monthly mortgage payment and considering your overall debt-to-income ratio (DTI). With a lower monthly payment, you may be able to afford a more expensive house.

An adjustable-rate mortgage (ARM) can offer a relatively low mortgage rate starting out, but interest rates on ARMs adjust over a period of time and may eventually be much higher. However, you may be able to get into an ARM now and take advantage of a lower rate, then change the loan before it adjusts. Talk with your lender about the possibility of converting your ARM to a fixed-rate mortgage if rates go lower.

Historical mortgage interest rates and refinancing

Mortgage refinancing is the process of swapping your old loan for a new one that ideally has more favorable loan terms. Homeowners can take advantage of reduced interest rates to decrease their monthly payment if rates are lower than when they made their initial purchase. This savings could go toward the principal loan balance, other debt payments or into a savings account.

A cash-out refinance is a refinancing option if you have enough equity in your home. With a cash-out refinance, you can tap into home equity you’ve built through repayment of your home loan as well as home value appreciation. You can use that money to pay off current debts or make home renovations.

If you’re thinking about refinancing, use our refinance calculator to see what your new monthly mortgage payment could be.

The bottom line: Mortgage rates are cyclical

By looking at all the historical mortgage rate data available from Freddie Mac, a trend becomes clear: With the exception of a spike in the 1980s, rates have gotten lower every decade – until now. Even though rates have increased since 2021, they’re still low in historic terms, and there’s reason for optimism looking forward.

Ready to start your journey to homeownership? Start an application online today and lock in your interest rate.