Are the mortgage rates really high?

We hear a lot of statements that we are going through the time of really high loan and Federal Reserve Bank interest rates, and it has an extreme impact on everything in the people life. So, we decided to look at historical numbers.

Went through multiple sites where some historical data is published like Bankrate, The Mortgage Reports, US News Money and other. From our perspective best source of such information, we can find is FRED Economic Data published by Federal Reserve Bank of St Louis and that’s the one we used. It provides data from 1971 to present day with multiple configurable filers and aggregations. Reviewing those we decided that for our purpose the best is 30-Year Fixed Rate Mortgage the United States using Monthly Average aggregation. Here is what we’d found.

Till end of 2008 rates were above 5% and started significant downward trend from that point. Since we’re trying to analyze longer historical period, we consider this as an exception or very modern development if you wish and do not look at that for a long-term comparison but will touch on that later. Average rate in February 2024 was 6.78% (current registered on 03/07/24 is just 0.1% higher at 6.88%), since 1971 rates went below this value several times: end of 1998, fall of 2001, from June of 2002 through June 2022 and couple of most recent month. Since 1971 we have a total of 635 data sample, in 258 of those the value was below current. Doing simple math, we find that mortgage rates were lower than current value 40% of the whole time period, not even half of the time. So, we cannot name the current rates abnormally high by statistical standards. And just for comparison highest observed rate from the data set was recorded in October of 1981 at 18.45% which is almost 3 times higher than the current one. The oldest reported value of 7.31% in April of 1971 is still higher than the current and only 0.31% lower than the highest value of the most recent year.

By all practical means we shall talk that there was a period of abnormally low interest rates that created a number of issues for personal and business but that is out of scope for this writing, and we’ll discuss it in a separate post. Keep an eye on our site for more info.