Historical Mortgage Rates in the US: Averages and Trends Over Time

According to the Federal Reserve Economic Data, the average annual 30-year fixed mortgage rate in the U.S. is 6.72% as of 2024. Mortgage interest rates represent the percentage of the loan amount that borrowers pay in interest annually.

When mortgage rates are higher, purchasing a home becomes more expensive, which can reduce the number of home sales and cool down the housing market. Understanding mortgage interest rates history can help homebuyers plan their budget, compare loans and make more informed homebuying decisions.

In the U.S., two common types of fixed-rate mortgages are the 30-year and 15-year options. Over time, the trends for these two mortgage types have differed, influenced by factors such as inflation and Federal Reserve policies. Both mortgage types respond to broader economic conditions, but the 15-year mortgage is typically more sensitive to short-term fluctuations due to its shorter duration.

The 30-year fixed mortgage gained popularity in the 1970s, with its highest average annual rate recorded in 1981 at 16.64%, driven by the Federal Reserve's aggressive inflation-fighting measures. Since then, annual rates have generally trended downward, fluctuating based on economic conditions and Federal Reserve policies.

The 30-year fixed rate hit its lowest annual average of 2.96% in 2021 due to the Federal Reserve's response to the COVID-19 pandemic, which included lowering interest rates to stimulate the economy. Rates began rising after 2021, reaching 5.34% in 2022, 6.81% in 2023, and slightly declining to 6.72% in 2024.

Source: Federal Reserve Economic Data

In 2024, the average annual rate of a 15-year fixed mortgage is 5.97%, down slightly from 6.1% in 2023. Its highest annual rate was recorded in 1991 at 8.77%, while the lowest point was reached in 2021 at 2.27%. Since reaching its lowest point in 2021, the annual rate has risen significantly, reaching 4.58% in 2022 and 6.11% in 2023 before slightly declining in 2024.

Several historical events and policy changes have influenced the trend of 15-year fixed-rate mortgages, including the Great Depression, the influx of baby boomers into the housing market and the subprime mortgage crisis.

Source: Federal Reserve Economic Data

The 30-year fixed mortgage, the most common type of home loan, has experienced notable fluctuations since the 1970s. In 2024, rates began at 6.64%, peaked at 7.06% in March, and gradually dropped to 6.18% by September.

Major events like the 1981 inflation surge, the 2008 financial crisis and the 2021 pandemic response led to sharp changes in mortgage rates, highlighting how external factors can greatly impact borrowing costs. Future mortgage rates are also difficult to predict as the economic climate, inflation and interest rates can all be factors.

The 30-year fixed mortgage was first recorded in 1971, starting at 7.33%, according to Freddie Mac. By the end of the decade in 1979, rates had climbed to 12.9%. The rise in mortgage rates was driven by several major events, including the Vietnam War's conclusion, the Great Inflation and the Energy Crisis of the 1970s.

High inflation during this period, which peaked at 11.2% in 1974, caused lenders to increase rates to offset economic uncertainty. These factors led to significant volatility for borrowers, making mortgages more expensive toward the end of the decade.

Source: Federal Reserve Economic Data

The 1980s saw mortgage rates hit all-time highs, with 30-year fixed rates peaking at 18.63% in October 1981, as inflation hit 11.6%. The decade's lowest average rate was 9.04%. To combat inflation, the Federal Reserve passed the Monetary Control Act in 1980, which helped stabilize inflation by 1982, but mortgage rates remained high, making homes less affordable for many. This rate rise mirrored home prices, with the median home price almost doubling from $64,600 in 1980 to $120,000 by 1989.

Source: Federal Reserve Economic Data

During the 1990s, mortgage rates finally dipped below 10%. They peaked at 10.67% in early 1990 but steadily declined throughout the decade. By the mid-1990s, rates had fallen below 7%, sparking a refinancing boom as many homeowners took advantage of the lower rates to reduce their monthly payments.

This decline was largely due to stable inflation, which decreased borrowing costs. The low-rate environment also fueled a housing boom, as more Americans could afford homes.

Source: Federal Reserve Economic Data

Mortgage rates steadily declined in the 2000s, with 30-year fixed rates settling between 5% and 6% by 2003 and remaining stable for much of the decade. The highest rate peaked at 6.79% in mid-2006. However, the rapid expansion of subprime lending led to a housing bubble, increasing financial risk.

By 2008, the housing market collapsed, triggering the financial crisis. That year, mortgage rates averaged 6.03%. As the crisis unfolded, many homeowners lost their homes, and new mortgages became harder to secure. Investors then shifted to safer assets, causing rates to fall to record lows in the following years.

Source: Federal Reserve Economic Data

In the 2010s, 30-year fixed mortgage rates ranged from a record low of 3.32% to a high of 5.21%. The decade was marked by a slow recovery from the Great Financial Crisis of 2008. As the housing market stabilized, relatively low mortgage rates spurred homeownership and refinancing.

The economic recovery from the Great Recession drove the decline in rates. Initially, higher rates followed widespread foreclosures, but as the market cooled and demand fell, rates dropped, helping home prices stabilize and bringing the housing market back on track.

Source: Federal Reserve Economic Data

At the start of the 2020s, mortgage rates steadily declined, hitting a historic low of 2.65% in early 2021. However, by 2022, rates began to rise sharply, peaking at 5.81% in June. The initial drop in rates was driven by the COVID-19 pandemic, which caused economic uncertainty and cautious financial behavior.

The pandemic, along with the Federal Reserve's actions to control inflation, heavily influenced these fluctuations. Despite low rates in 2021, many buyers faced challenges due to rising home prices. By 2022, rate hikes further pushed up the cost of homeownership.

Source: Federal Reserve Economic Data

Historically, there has been a close relationship between mortgage rates and median home prices. As mortgage rates fluctuate, they can significantly impact housing affordability and demand. For example, during periods of high mortgage rates, such as in the 1980s, fewer people could afford homes, which slowed down home sales. Low rates, like those seen in the early 2020s, can stimulate homebuying demand but may also lead to higher home prices as more people compete for available properties.

Even when mortgage rates fall, rising home prices can make it harder for buyers to enter the market. The challenge is particularly difficult for first-time homebuyers as they struggle to save for down payments and secure loan approval.

Source: Federal Reserve Economic Data

Understanding historical mortgage rates helps predict trends and inform financial decisions. Here are some of the most frequently asked questions and answers about mortgage rate history.

To learn more about home buying, review the other MoneyGeek resources below.

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• Conventional Home Loans: What They Are and How They Work: Learn how traditional private home loans work.