Mortgage Rates: Past, Present, and Possible Future

September 6, 2023

Interest Rates & Housing Market Shenanigans

If you’re in the house-hunting game this year, you’re probably tracking mortgage rates like a hawk. After all, these sneaky digits can make or break your dream home fantasies. But let’s not get too serious – it’s time to take a wild ride through the mortgage rate timeline, from the past to the present, and peek into the crystal ball for some possible future giggles.

Brace Yourself for Sticker Shock, or Maybe Not!

Freddie Mac, our trusty time traveler, has been on the case since April 1971, monitoring the 30-year fixed mortgage rate. They’ve got this nifty weekly report called the Primary Mortgage Market Survey that crunches numbers from lenders all over the land (check out the funky graph below):

If you squint at the right side of that graph, you’ll see that mortgage rates have been doing a little cha-cha, dancing their way up since last year. But hold your breath – today’s rates are still below the 52-year average. Yep, you heard that right. While this historical nugget is cool, let’s be honest – we’ve been living the good life with rates between 3% and 5% for the past 15 years.

Now, here’s the kicker. Even though rates are chilling near their long-term average, some of you might still be doing the “yikes” dance. That’s because many folks have gotten comfy with the rates we’ve been having, and anything lower would be like finding extra fries in your takeout bag. To figure out if we’re in for a treat, let’s talk about the I-word – inflation.

Where Are Those Mortgage Rates Headed?

The Federal Reserve’s been doing a stand-up job trying to keep inflation in check since 2022. That’s a big deal because, historically, inflation and mortgage rates have been like peanut butter and jelly (see the snazzy graph below):

This graph spills the beans on the quirky relationship between inflation and mortgage rates. Take a peek at the left side, and you’ll notice a pattern – when inflation does its happy dance (shown in blue), mortgage rates join the party soon after (in green).

Now, check out the spotlight on the graph – that’s where we’ve had some spicy inflation recently, and mortgage rates haven’t quite kept up. So, if history’s our guide, the market might be giving mortgage rates the side-eye, waiting for them to join the inflation fun and take a nosedive. We can’t predict the future with a magic 8-ball, but taming inflation suggests mortgage rates could be sliding down the slippery slope soon.

In a Nutshell

To decode the mortgage rate mystery, let’s rewind the tape and revisit history. Inflation and mortgage rates are BFFs, and if they stick to their story, the dip in inflation could spell good news for mortgage rates and your homeownership daydreams. So, keep an eye on those rates, and remember, the mortgage rate rollercoaster is full of unexpected twists and turns!