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Mortgage Rate History | Where Are We in Relation to the Norm?

March 24, 2025 / Tom Bonetto / 0 Comments

For many homebuyers, the last few years have felt like a perfect storm of trials – rising home prices and climbing mortgage rates limiting affordability.

Many people are now wondering if 2025 will finally reverse the trend.

house keys a cup of coffee and measurement tools

While there’s no magical analysis tool to help to navigate market shifts, a look back at mortgage rate history can offer clues—and maybe even some hope for those waiting to make their move.

While the history of mortgage rates provides some good context, it’s important to understand that borrowers with healthy credit profiles and strong finances often get mortgage rates well below the industry norm.

A quick spoiler…the long term average for the 30-Year mortgage is just under 8%.

You can find out more here from Peter Miller and The Mortgage Reports…

Historical Mortgage Rates Graph

Current rates are more than double their all-time low of 2.65% (reached in January 2021). But if we take a step back and look at the history of mortgage rates, they’re still close to the historic average.

Freddie Mac — the main industry source for mortgage rates — has been keeping records since 1971. Between April 1971 and March 2025, 30-year fixed-rate mortgages averaged 7.73%.

The 30-year Fixed-Rate Mortgage Chart

Understanding mortgage rates history helps frame current conditions and shows how today’s rates compare to the historic mortgage rates averages.

Here’s how average 30-year rates have changed from year to year over the past five decades:

A Look at the Last 2+ Years

Mortgage interest rates dropped to historic lows during the COVID pandemic, actually falling below 3% in 2020 and 2021 due to crisis related moves by the Federal Reserve. These record lows gave way to a dramatic reversal as economic conditions changed.

By 2022, inflation surged, pushing mortgage interest rates to their highest levels in twenty years! Freddie Mac reported the average 30-year rate climbing from 3.22% in January 2022 to a peak of 7.08% in October, marking a significant shift in borrowing costs.

As we look back on 2024, rates have shown some fluctuation, including a temporary dip in September, but have yet to deliver consistent declines.

While the Federal Reserve implemented three rate cuts in 2024, its decision to hold rates steady in its first meeting of 2025 has tempered expectations.

However, optimism persists as many continue to expect potential rate reductions later in the year, especially with another Fed meeting approaching later this month. You can find out more regarding the Federal Reserve and mortgage rates here…

Historic Mortgage Rates: The Average

The long-term average for mortgage rates is just under 8 percent…and that’s according to Freddie Mac records going back to 1971.

But historical mortgage rates show that rates can fluctuate significantly from year to year, and some years have seen much bigger moves than others.

Will Rates Eventually Go Back Down?

Experts predict further declines, with the Mortgage Bankers Association and Wells Fargo forecasting the 30-year fixed mortgage rate could fall to between 5.5% and 6.0% by the end of this year.

two red balloons with percentage symbols on white background

More importantly, you can find my 2025 forecast here…

While the Federal Reserve held rates steady in its January meeting, the average 30-year fixed rate has edged lower in recent weeks, creating a more favorable market for buyers as borrowing costs ease.

As a borrower, it doesn’t make much sense to try to time your rate in this market – and you can find more on that here…

My best advice is to make that purchase when you’re financially ready and can afford the home you want — regardless of current interest rates.

Remember that you’re not stuck with your mortgage rate forever. If rates drop significantly, homeowners can always refinance later on to cut costs. Remember the key adage – “Marry the House but Date the Rate”…

In Conclusion

If you find the house that you are looking for, I recommend that you make that purchase, regardless of the interest rate.

Homes are appreciating at around 4% annually, so the longer you wait, the more expensive that home will be down the road. Also, it’s important to remember that average mortgage rates are only a general benchmark.

If you have good credit and strong personal finances, there’s a good chance you’ll get a lower rate than what you see in the news. So reach out to me to discuss your next steps!

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Waiting to Purchase a Home Can Actually Be More Costly

March 17, 2025 / Tom Bonetto / 0 Comments

Many prospective homebuyers wait to purchase a home in hopes of finding a better deal, saving for a larger down payment, or waiting for lower interest rates.

While these reasons might initially seem financially sensible, waiting to buy a home can often lead to higher costs in the long run.

Rising home prices, ever-changing mortgage rates, and missed opportunities for equity growth can actually make delaying a home purchase more expensive than acting sooner.

Rising Home Prices

One of the most significant reasons waiting to buy can be costly is the continuous rise in home prices.

Real estate markets tend to appreciate over time, meaning that a home that costs $300,000 today could be significantly more expensive in just a few years.

By postponing a purchase, buyers risk paying tens of thousands of dollars more for the same property in the future, making homeownership less affordable.

Missing Out on Equity Growth

Owning a home allows buyers to build equity as property values increase and mortgage balances decrease over time.

When buyers delay purchasing, they miss out on the opportunity to build wealth through home appreciation.

Homeownership acts as a forced savings plan, and the longer one owns a home, the more equity they accumulate. Waiting means missing years of potential financial growth.

Renting Costs Add Up

Many people choose to rent while waiting to buy, but rent payments do not build equity or provide long-term financial benefits.

Additionally, rental prices tend to rise over time, often making renting more expensive than a fixed mortgage payment.

The money spent on rent could be used to pay down a mortgage instead, helping buyers secure their financial future.

Limited Housing Inventory

As demand for homes increases, inventory often becomes more competitive, making it harder to find an affordable home.

If a buyer waits too long, they may find themselves in a market where fewer homes are available within their budget.

This competition can drive up prices even further, making it more challenging to purchase a home at a reasonable cost. Find out more on that here…

In Conclusion

While it may seem like waiting to buy a home provides financial advantages, the reality is that delaying can lead to higher costs due to rising home prices and lost equity opportunities.

Renting also provides no return on investment, while housing market competition can make future purchases more difficult.

For many buyers, acting sooner rather than later can be the most financially beneficial decision. Do reach out to me so we can put a plan together that will help you purchase a home in the very near future!

Now Is the Time to Apply for a Mortgage – Mid-March 2025

March 10, 2025 / Tom Bonetto

If you’ve been sitting on the sidelines waiting for the “perfect time” to buy a home, this might be the sign you’ve been looking for.

Mortgage applications just jumped 20% in a single week, according to the latest C NBC report, mostly due to falling interest rates.

What does that mean for today’s buyer? It means the window of opportunity is open—but it probably won’t stay open forever.

Mortgage demand is surging as rates drop. Don’t wait—now’s the time to apply and lock in your opportunity before competition heats up.

What’s Happening in the Market

After months of higher rates, interest rates have dropped, and homebuyers are wasting no time. More buyers are getting pre-approved, locking in rates, and hitting the market before competition picks up even more.

We’re already seeing the shift. The number of mortgage applications surged, and with spring homebuying season just around the corner, this is just the beginning.

When demand for homes pick up, so will the price of buying that home. You can find out more on that here…

Why Do a Mortgage Application Now?

Here’s what’s happening in the marketplace today:

Rates dropped – and we don’t know how long they’ll stay this on this downward trend.
Competition is rising – as more buyers jump back into the market, the best homes will go fast…and the rest will become more expensive.
Waiting could cost you – not just in rate increases, but also in bidding wars as demand grows.

What This Means for Would-Be Buyers

If you’re serious about buying this year, you have a couple of choices:

Take advantage of today’s rates and get pre-approved before the rush.
Wait, hope rates stay low, and risk higher prices and more competition.

The Bottom Line

There’s a lot in this housing and mortgage market you can’t control. But getting ahead of rising competition and securing a better rate is something buyers can do right now!

If you’ve been thinking about buying, do reach out to me here.

We can take a look at your options, answer any questions, and help you get prepared to take full advantage of this moment.

How to Start Saving for a Home Purchase: A Step-by-Step Guide

March 3, 2025 / Tom Bonetto

Saving enough money to buy a house might seem like a monumental task, but don’t let that prevent you from taking the first steps.

Remember the old adage: How do you eat an elephant?

Answer: One bite at a time.

Once you get started, you will find getting there is more accessible than you expected.

Here are a few thoughts on getting there…

Start Saving – Set a Goal

The biggest hurdle is often the down payment — so that’s where we will begin.

The down payment is the upfront money used to purchase a home. Then, you can finance the rest of the house with a home loan. Requirements on the size of the down payment differ by loan type, but your down payment can be as low as 3%, especially if you’ve got a solid credit score and manageable debts.

To save for a down payment, start by knowing the minimum requirement for the type of loan you plan to get. The most common mortgages are:

Conventional loans – down payments as low as 3%
FHA loans – down payments as low as 3.5%
VA loans – down payments as low as 0%, although these loans are limited to current and former U.S. service members and qualifying spouses.
Jumbo loans – down payments as low 10%. These are larger mortgages that go beyond conforming loan limits

You will also need to consider saving for closing costs, as well – and these are typically between 2% and 5% of the home’s purchase price.

One other thing to consider…you can use gift funds from family for down-payments and closing costs. Find out more here…

Set…and Stick to Your Budget

You don’t have to give up everything to make this work — the cost of a coffee or two a week won’t make or break your upcoming purchase. But minimizing other expenses may help you save for a house faster. Here are a few places to look:

Shop your car insurance rates to make sure you have the best deal available
Find out if you can save by checking your technology plans (cable/phone/internet/cell phone)
Refinance your student loans or refinance your auto loan to lower the monthly payments.
Cancel subscriptions you’re not using.

To find other ways to reduce expenses, track your spending for a month to see where your cash goes.

Save Your Raises and One-offs

One great idea is to transfer any extra money to your house savings before you get a chance to spend it. That might include:

microphotography of orange and blue house miniature on brown snail s back

A tax refund or credit
A raise or bonus from work
An inheritance
Birthday, holiday or wedding gift money

Automate Your Savings

It’s easiest to save when you’re not even thinking about it. Try these tricks:

Set up automatic transfers – make saving easier by scheduling a transfer from your checking to your savings account. Set it up to deposit a little bit every month, every week or whatever rhythm works for you. Your employer also might let you set up a direct deposit split, so some of your paycheck goes directly into your savings account.
Stash spare change – no, not in a piggy bank (though you can do that too, if you want). A variety of banks and budgeting apps allow users to round up card purchases to the nearest dollar and put the change in a linked savings account.
Use a cash-back credit card – you guessed it — put that cash back toward your down payment fund. To maximize your cash back, put as many purchases as possible on your cash-back credit card, making sure to pay it off each month so that interest charges don’t decimate your earnings.

Utilize Other Savings

You might have some savings right under your nose – some things include:

Your 401(k) – many would-be buyers borrow against it – and they pay themselves the interest back!
Your individual retirement account – first-time home buyers can withdraw up to $10,000 from an IRA without penalty to purchase a home. However, you’ll have to pay the income tax due on the withdrawal, unless it’s a Roth IRA.

Improve or Maintain Your Credit Score

It seems like those with good credit catch all the breaks when it comes to getting the right mortgage. It’s easier for them to qualify, and they get lower interest rates.

So, make sure to get your credit score in good shape! FICO scores range from 300 to 850 – and mortgage applicants get the best mortgage rates and terms when their FICO scores are 720 or higher.

To find out what is impacting your FICO score you will want to review your credit reports. You can obtain a free copy of your credit report from each of the three main credit reporting agencies — Equifax, TransUnion, and Experian — at www.annualcreditreport.com.

I’d also invite you to check out this article on improving your credit score here…

In Conclusion

Small steps add up, so tackle your savings goal from multiple angles.

It might feel daunting to save for a house when prices are on the rise — but every journey has to start somewhere. Whatever you can afford to sock away will only benefit you in the long term.

Please do reach out to me to start strategizing on how you can make a home purchase happen, as I’d be glad to help work on a plan that fits your situation.

How FHA Loans Work | The Pros and Cons

February 24, 2025 / Tom Bonetto

One of the more popular financing options for buyers are FHA loans. These mortgages are backed by the Federal Housing Administration (FHA) and can be a great fit for many would-be buyers.

These loans are designed to make homeownership more accessible by offering flexible qualification requirements compared to conventional mortgages.

At the same time, FHA loans also come with specific costs, such as mortgage insurance premiums (MIP), which borrowers should carefully consider.

Let’s dive in on the specifics…

What Is an FHA Loan?

An FHA loan is a government-backed mortgage insured by the FHA but issued by approved private lenders, such as mortgage firms, banks, or credit unions.

The FHA does not lend money directly; instead, it provides insurance to lenders, reducing their risk and encouraging them to offer loans to borrowers who might not qualify for conventional financing. FHA loans are particularly appealing to first-time homebuyers and those with some financial constraints.

An FHA loan can only be utilized to purchase a primary residence, not a 2n home or investment property.

Eligibility Requirements

To qualify for an FHA loan, borrowers must meet specific requirements set by the FHA. The minimum credit score for an FHA loan is typically 580 for a 3.5% down payment, but borrowers with scores between 500 and 579 may still qualify with a 10% down payment.

Other requirements include a steady income and proof of employment. Additionally, the home being purchased must meet FHA property standards to ensure safety and livability.

Benefits of FHA Loans

Low credit score requirements: Borrowers may qualify for an FHA loan with a credit score as low as 500. However, most lenders require a minimum score of 580, which is still lower than the conventional loan minimum of 620. The higher your credit score, the more favorable your loan terms will likely be.

Low down payment requirements: FHA loans are available with down payments as low as 3.5% of the purchase price.

Competitive interest rates: Interest rates on FHA loans are comparable to conventional loans, but rates are sometimes lower for FHA loans because the government backing makes FHA loans lower risk to lenders. But the interest rate you’re offered is based on your full financial profile and mortgage insurance.

No prepayment penalty: FHA loans can be paid off at any time, including for reasons like refinancing and selling the home.

Down payment assistance: There are a wide range of down payment assistance programs that can be applied to FHA loans. Gifts from relatives can also be utilized for the down payment and closing costs.

Disadvantages of FHA Loans

Mortgage insurance premiums (MIP): All FHA loans require homeowners to carry mortgage insurance in case of loan default. This includes both an upfront, one-time premium at closing, as well as ongoing monthly premiums paid alongside your monthly mortgage payment.

Limited loan amounts: There are limits to how much you can borrow with an FHA loan. The amount varies by location, based on the cost of living in that location, and is updated yearly. You can reach out to me to find out what the FHA loan limits are in your specific county.

Property requirements: The Federal Housing Administration wants to ensure the home being purchased is safe to live in, so there are certain criteria the home must meet. Homes in need of significant repair, including issues like damaged foundations, exposed electrical systems, lead paint, and inadequate ventilation won’t qualify for an FHA loan.

Mortgage Insurance Premium (MIP)

FHA loans require Mortgage Insurance Premium (MIP). This insurance protects the lender in case the borrower defaults. It isn’t optional and is mandatory on all FHA loans.

FHA loans require both an upfront MIP (UFMIP), which is 1.75% of the loan amount, and an monthly MIP that ranges from 0.45% to 1.05% of the loan balance, depending on the loan term and down payment.

Unlike private mortgage insurance (PMI) on conventional loans, FHA MIP often lasts for the life of the loan unless the borrower refinances into a conventional mortgage.

FHA Loan Limits

FHA loans have borrowing limits that vary by location and are adjusted annually based on home prices in different areas.

These limits ensure that FHA loans are used for modestly priced homes rather than luxury properties. Borrowers purchasing homes in high-cost areas may find these limits restrictive, making conventional loans a better option in some cases.

Please reach out to me to find out what the FHA loan limits are in your specific county.

FHA Loan Closing Costs

Closing costs are the out-of-pocket expenses borrowers must pay in order to finalize their loan.

They include things like lender fees, appraisal, title services and documentation costs. Buyer closing costs are usually between 2% and 4% of the home’s purchase price and must be paid at closing.

FHA guidelines also allow sellers to cover some of the buyer’s closing costs, up to 6% of the purchase price (effectively all closing costs). Of course, this would have to be part of your negotiations with the seller when you make your offer.

How to Apply for an FHA Loan

The process of getting an FHA loan is similar to getting a conventional loan.

Borrowers will need to go through the formal application process and provide information and documentation about their income, employment, and credit history. Once the application is complete, your mortgage lender will review it and determine if you meet the requirements for an FHA loan.

Refinancing Options

FHA borrowers have access to refinancing options, including the FHA Streamline Refinance program, which allows homeowners to refinance with minimal paperwork and no new appraisal.

This can help borrowers reduce their interest rate and monthly payments. However, refinancing into a conventional loan may be necessary to eliminate MIP, which can become costly over time.

Conclusion

FHA loans provide a valuable path to homeownership for those who might struggle to qualify for conventional financing.

With lower down payments and flexible credit requirements, they open the door for many buyers. However, the added cost of MIP and property restrictions can be significant drawbacks.

Understanding the full scope of FHA loans helps borrowers make informed financial decisions and determine whether this type of mortgage is the best fit for their needs. Reach out to me to discuss if this loan option is right for you!

The Lending Coach

Mortgage Rate History | Where Are We in Relation to the Norm?

Historical Mortgage Rates Graph

The 30-year Fixed-Rate Mortgage Chart

A Look at the Last 2+ Years

Historic Mortgage Rates: The Average

Will Rates Eventually Go Back Down?

In Conclusion

Waiting to Purchase a Home Can Actually Be More Costly

Rising Home Prices

Missing Out on Equity Growth

Renting Costs Add Up

Limited Housing Inventory

In Conclusion

Now Is the Time to Apply for a Mortgage – Mid-March 2025

What’s Happening in the Market

Why Do a Mortgage Application Now?

What This Means for Would-Be Buyers

The Bottom Line

How to Start Saving for a Home Purchase: A Step-by-Step Guide

Start Saving – Set a Goal

Set…and Stick to Your Budget

Save Your Raises and One-offs

Automate Your Savings

Utilize Other Savings

Improve or Maintain Your Credit Score

In Conclusion

How FHA Loans Work | The Pros and Cons

What Is an FHA Loan?

Eligibility Requirements

Benefits of FHA Loans

Disadvantages of FHA Loans

Mortgage Insurance Premium (MIP)

FHA Loan Limits

FHA Loan Closing Costs

How to Apply for an FHA Loan

Refinancing Options

Conclusion

Apply Now – Online Application

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