Mortgage rates have essentially doubled since the beginning of this year. Historically, however, interest rates have often been higher — sometimes much higher — than they are today.
The average 30-year mortgage rate over the last fifty years is just under 8%. So even though today’s mortgage rates have jumped to the 5% range, they’re still a good deal by comparison.
I’m linking to an article from Peter Miller of The Mortgage Reports that’s a must read in order to gain some good perspective on what’s happening in today’s marketplace.
2022 Mortgage Rate Chart
Mortgage interest rates fell to record lows in 2020 and 2021 during the Covid pandemic.
However, inflation has now surged to four-decade highs, causing those rates to rise quickly this year.
Despite this increase, today’s 30-year mortgage rate is still quite a bit below average from a historical perspective.
Freddie Mac — the main industry source for mortgage rates — has been keeping records since 1971. Between April 1971 and August 2022, 30-year fixed-rate mortgages averaged 7.76 percent.
Here’s the average mortgage rate by year since 1974…
Mortgage Rate Outlook
As Freddie Mac explained on August 4:
“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth. The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, especially as the Federal Reserve attempts to navigate the current economic environment.”
With that said, it’s not easy to predict what will happen to mortgage rates in late 2022. The Fed is likely to keep hiking interest rates in an attempt to bring inflation under control. Couple that with a recession, however, and mortgage rates could very well move lower.
Finally, it’s important for you and our clients to understand that the average mortgage is held for less than 7 years…and they are not at all married to that rate, especially if they get better!
If you or your clients are considering a purchase, your real estate search shouldn’t go on hold because of rising inflation or higher mortgage rates. Contact me for more…as it would be my pleasure to help you.