Economist Mike Walden: Mortgage Interest Rates in Perspective

I’m Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at mortgage interest rates in perspective.  Mike, there are grumblings among people looking to buy a home that mortgage rates have taken a jump.  They are now averaging 5% for 30 year fixed rate contract. Put this rate in perspective for us.  Is 5% close to an all-time high?

  1. Not even close
  2. Only appear high because 2 years ago they were under 3.5%
  3. But they are still historically low
  4. For the 40 years prior to 2008, 30-year fixed rate were never under 5%
  5. Indeed, if you were looking to buy a home in the late 1970s or early 1980s, good luck – mortgage interest rates were double digit, and peaked at over 18% in 1981
  6. Conclusion – rates are not high now – instead, they were abnormally low before
  7. Now they are moving toward normal

And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.