How Do Today’s Mortgage Interest Rates Compare to History?
When mortgage interest rates plummeted under 3% in 2021, most people didn’t think much about it. But now that you see homeownership slipping from your financial grasp, you’re wondering if affordable housing is dying out.
Spoiler alert: your dreams of homeownership are still within reach. However, you need to step up your game if you want to get the best mortgage rate possible.
Keep reading for a closer look at how today’s interest rates compare with historical data so you can tell if it’s the right time to buy.
Today’s Interest Rates
The best rates in Missouri are around 5.2% for a 30-year fixed loan. This current rate is roughly what it was in 2008, before the housing bubble burst.
However, this isn’t the highest interest that REALTORS® have seen in Missouri real estate—or anywhere else in the country.
How Do Today’s Interest Rates Compare to Historical Interest Rate Trends?
With the recent spike in mortgage rates, a typical home buyer’s monthly payments on a conventional 30-year loan have increased by about $600. While this may sound like quite a lot, your great-grandparents probably paid even more for their mortgages back then.
The average rate in 1981 was 16.64%, the highest mortgage rate that St. Charles real estate has ever seen. As a result, fewer people were buying homes in the 80s.
The Federal Reserve steadily decreased this rate to 10% in 1990 to encourage more homeownership, which resulted in a new real estate boom. The average rate continued to fall to around 7% by the end of the decade, and it stayed low into the 2000s.
Between 2010 and 2020, mortgage rates fluctuated between 3.1% and 4.7%. In 2022, however, there was an interest rate spike, and it landed the average rate at around 5%. Experts expect the market to remain between 5% and 6% until the end of the year.
When Were Interest Rates at an All-Time Low?
In December 2020, mortgage rates hit 2.65%. That’s the lowest they’ve been since the Great Recession in 2009.
If you’re looking at home prices compared to today’s era as well, they were a bit cheaper. Some REALTORS note that the average home in 2020 was less than $350,000. Today, most homes in the US are over $400,000 on average.
A Note to Home Buyers
While your REALTOR relies on numbers such as these during negotiations, comparing the real estate market of today with that of yesteryear isn’t always easy for homebuyers to do on their own. It’s important not to get too caught up in what happened two years ago versus five years ago or 10 years ago.
Owning a home is different now than in the past, but a professional real estate broker can help you navigate those changes so that you don’t panic when rates go up.
Spend Less on Mortgage Interest Rates
While it’s true that interest rates are on the rise, they still aren’t as high as they were 40 years ago. They’re also not going to be at this level forever. So if you’re exploring the St. Louis or St. Charles real estate market, for example, now is a good time to make an offer.
If you’re new to this area, MarketPoint Realty makes buying a home in Missouri a breeze. Contact us today so we can help you find your dream home and stay within budget so that you won’t have to pay more than necessary in interest.