Interest Rates Still Historically Low

The Fed recently announced a .5 raise in interest rates leading to the 30-year fixed mortgage
rate to end the first week of May 2022 at 5.27%. The rate rose 17 base points and is the highest
it has been since August of 2009. The same occurred for the 15 -year fixed mortgage rate,
ending the week up 12 base points at 4.52%. This increase in the interest rates has been
pushed to help combat inflation and experts have been saying that rates will continue to climb.
Although rates are expected to climb, this does not mean that the housing market is slowing
down anytime soon!

Historically, rates are still on the low side after reviewing the last 45 years of data. Let's look
back at the change in rates in 5 year increments. Starting in 1975-1980 the average mortgage
interest rate was 10.23%. From 1980-1985 the average rate was at an all time high of 14.33%,
this was brought on by rising oil prices, government overspending, and increased wages. The
most notable event that drove the rates up was the Oil Embargo of 1979 which caused
hyperinflation and caused the Fed to act swiftly.

From 1985-1990 the interest rate returned to a normal rate for the time of an average of 10.60%
slowly recovering from the previous 5 years. From 1990-1995, rates continued to drop down to
8.57% due to the emergence of the internet as a global commercial network. This spurred
investments into technology causing rapid economic growth in the US. The reason this new
economic prosperity caused the average rate for the time period to decrease is because of the
inverse relationship of the economy and interest rates. In the years 1995-2000, rates dropped
even further to 7.63%.

From 2000-2005 rates continued to drop to 6.52%

From 2005-2010 rates were at 5.73%, this low interest rate was not representative of the
economy at the time.

From 2010-2015 rates were 4.13%

Lastly, from 2015- 2020 the average mortgage rate was at an outstanding record low of only
3.90%. It only makes sense that the Fed would raise interest points at this time. Do not look at
the rates in today’s market and let it incite fear in you and dissuade you from making your home
buying dreams come true. Instead, relish in the fact that rates are still historically low and your
dreams are still within your grasp!