Historical Mortgage Rates: 1971 To The Present
Author:
Kevin GrahamMar 29, 2024
•6-minute read
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.
| Year | Average Monthly Rate |
|---|---|
| 1972 | 7.38% |
| 1973 | 8.04% |
| 1974 | 9.19% |
| 1975 | 9.05% |
| 1976 | 8.87% |
| 1977 | 8.85% |
| 1978 | 9.64% |
| 1979 | 11.20% |
| 1980 | 13.74% |
| 1981 | 16.64% |
| 1982 | 16.04% |
| 1983 | 13.24% |
| 1984 | 13.88% |
| 1985 | 12.43% |
| 1986 | 10.19% |
| 1987 | 10.21% |
| 1988 | 10.34% |
| 1989 | 10.32% |
| 1990 | 10.13% |
| 1991 | 9.25% |
| 1992 | 8.39% |
| 1993 | 7.31% |
| 1994 | 8.38% |
| 1995 | 7.93% |
| 1996 | 7.81% |
| 1997 | 7.60% |
| 1998 | 6.94% |
| 1999 | 7.44% |
| 2000 | 8.05% |
| 2001 | 6.97% |
| 2002 | 6.54% |
| 2003 | 5.83% |
| 2004 | 5.84% |
| 2005 | 5.87% |
| 2006 | 6.41% |
| 2007 | 6.34% |
| 2008 | 6.03% |
| 2009 | 5.04% |
| 2010 | 4.69% |
| 2011 | 4.45% |
| 2012 | 3.66% |
| 2013 | 3.98% |
| 2014 | 4.17% |
| 2015 | 3.85% |
| 2016 | 3.65% |
| 2017 | 3.99% |
| 2018 | 4.54% |
| 2019 | 3.94% |
| 2020 | 3.11% |
| 2021 | 2.96% |
| 2022 | 5.34% |
| 2023 | 6.81% |
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.