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Historical Mortgage Rates From The 1970s To 2021: Averages And Trends

Kevin Graham5-minute read

May 18, 2022


Mortgage rates dropped in 2020 due to the Federal Reserve lowering rates in response to COVID-19. Since that time, rates have edged up slightly, but are still near historic lows.

Let’s look at the rise and fall of mortgage rates through the decades.

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Thanks to Freddie Mac, there’s solid data available for 30-year fixed-rate mortgage rates beginning in 1971.

Rates in 1971 were in the mid-7% range, and they moved up steadily until they were at 9.19% in 1974. They briefly dipped down into the mid- to high-8% range before climbing to 11.20% in 1979. This was during a period of high inflation that hit its peak early in the next decade.


In both the 1970s and 1980s, the United States was pushed into 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 that the price of goods and services rose extremely fast.

To counteract hyperinflation, the Federal Reserve 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 increased, too.

Interest rates reached their highest point in modern history in 1981 when the annual average was 16.63%, according to the Freddie Mac data. Fixed rates declined from there, but they finished the decade around 10%. The 1980s were an expensive time to borrow money.


In the 1990s, inflation started to calm down a little bit. The average mortgage rate in 1990 was 10.13%, but it slowly fell, finally dipping below 7% to come in at 6.94% in 1998.

According to a paper published by the Economic Policy Institute, one big reason for the economic growth and declining inflation seen later in the decade was the arrival of the internet in the mainstream consciousness. The increased investment in research and development of new technologies spurred a ton of economic growth.


Mortgage rates steadily declined from 8.05% in 2000 to the high-5% range in 2003. However, it wasn’t all milk and honey in this decade.

The housing crash happened in part because property values declined steeply until they hit their lowest point in 2008. This left many homeowners owing more on their homes than the property was worth. To provide some relief and to stimulate the economy, the Federal Reserve 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 0. 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.


Riding the wave of low bank borrowing costs, mortgage rates entered the new decade around 4.69%. They continued to fall steadily and were in the mid-3% range by 2012. In 2013, rates went up to 3.98%. A big reason for this was that the bond market panicked a little bit when the Federal Reserve said it would stop buying as many bonds.

When there are fewer buyers available, the yields on mortgage bonds have to go up to attract purchasers. This also causes mortgage rates to rise. Rates went up to 4.17% in 2014. In 2015, mortgage rates fell back to 3.85% 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 to rise after the 2016 presidential election. They reached their peak at the end of 2018/start of 2019. Rates on a 30-year fixed rate mortgage (FRM) ran between 3.95% on the low end and 5.34% on the high.

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Rates declined throughout 2019. When January 2020 came around, the average rate for a 30-year fixed was about 3.7%.

Then COVID-19 hit the United States. In response, the Federal Reserve dropped the federal funds rate to between 0 – 0.25%. This caused other short-term and long-term rates to drop.

This move was made to encourage borrowing on home loans, as well as other loans. It also led to a large increase in refinance and mortgage applications. By December, Freddie Mac reported an average mortgage rate for a 30-year FRM sitting at 2.68%.

Mortgage rates then hovered within the same range for the first half of 2021. The June rate increased slightly to 2.98%. Since then, rates have started to edge upward. As of October 21, Freddie Mac reported an average mortgage rate for 30-year FRM of 3.09%. Mortgage rate forecasts predict a continued increase by year’s end, which some attribute to inflation driven by temporary supply-chain issues. That could make 2021 – 2022 a good time to consider refinancing.

Historical Mortgage Rates And Refinancing

Refinancing is the process of swapping your old loan for a new loan. Homeowners can take advantage of lower rates to decrease their monthly payment. This extra money could go toward the principal, paying other debts or building up your savings.

A cash-out refinance is a refinancing option if you have enough equity in your home. The way a cash-out refinance works is you take out a loan for more than you owe on the home. You can use the extra to pay off other debts or make home renovations. If rates are lower than when you took out your first mortgage, your payment may not change much.

How Historical Mortgage Rates Affect Home Purchases

Lower mortgage interest rates encourage home buying. Low rates mean less money paid to interest. This translates to a lower payment. Mortgage lenders determine how much you can borrow by comparing your income to your payment. With a lower monthly payment, you may be able to afford more house.

Even if rates slightly rise, an adjustable rate mortgage (ARM) can still offer extremely low mortgage rates. The interest rates on ARMs adjust over a period of time. You may be able to get into a lower rated ARM now, then change the loan before it adjusts. Talk to your lender about the possibility of converting your ARM to an FRM if rates go lower.

Historical Mortgage Rates FAQs

Still curious about historical interest rates? Here are the answers to some of your burning questions:

What were the lowest mortgage rates in history?

The lowest historical mortgage rates in history for 30-year FRMs were more recent than you might think. December 2020 saw mortgage rates hit 2.68%, according to Freddie Mac, due largely to the effects of COVID-19. The same goes for the lowest average, with an annual rate of 3.11% for 2020.

What were the highest mortgage rates in history?

October 1981 saw 30-year FRM mortgage rates hit their historical peak at 18.45%. That same year saw the highest annual average at 16.63%. The culprit? Record inflation caused by the OPEC embargo.

What is the broad trend for mortgage rates?

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 are getting lower every decade. The average rate in 1971 was 7.54%. As of 2020, the average rate was 3.11%. That’s a drop of nearly 5% – good news for current and future homeowners.

With a historical view of trends under your belt, you can feel confident that you’ll know when you’re getting a good deal. If the time seems right, make your move. Get preapproved and seize the opportunity.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

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Kevin Graham

Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage, he freelanced for various newspapers in the Metro Detroit area.