Historic and Potentially Future Mortgage Rate Trends

Anyone that is looking to purchase a new home now is more than likely following the current mortgage rate trends. With home prices staying relatively strong, adjustments in mortgage rates are really impacting just how much homebuyers can afford. Where rates had been very low for years, it is a good time to look at the big picture of where rates have been, where they are today and where they are possibly headed to put things into perspective.

Mortgage Rate Historical Trends

Freddie Mac has been monitoring 30 year fixed rate mortgages for over 50 years dating back to 1971. They release the results from their mortgage market survey every week which averages mortgage application information from across the United States.

While rates have increased a handful of points over the past year or so, they are still lower than the 52 year average. This may be interesting overall but today’s buyers are still trying to stomach rates that are now around 7% where they were between 3 and 5% for a while. This is still a far cry from the 18% we had in the early 1980’s. Nevertheless a dip in rates these days would certainly be welcomed by today’s stressed buyers. Let’s take a look if this is realistic by examining inflation. 

Potential Future Rates

The Federal Reserve has been working to lower inflation since the beginning of 2022 which is important to note as there is a connection between inflation and mortgage rates. If we turn to trends of inflation and interest rates we see their patterns are almost always similar. When inflation has moved up or down over the past handful of decades, mortgage rates followed suit soon thereafter. Recent tracking of inflation indicates that it has moderated a bit this year, but we have yet to see mortgage rates follow with their similar pattern. But if history has proven to be a guide, then we should expect to see rates dip then soon too. While nobody has the ability to predict the future, it is insightful to review past trends so we know what we can realistically expect.