High Rates NOW?

This week, the Federal Reserve instituted another rate hike bringing the 30-year mortgage interest rate up to 7.5% – more than double last September’s rate of 2.9%. This might seem astronomical and unfair and cause you to want to have a temper tantrum right in the middle of your lender’s office. But it’s possible that, depending on how long they’ve been in the business, your lender might remember a time when rates were higher than they are today. 

Much Higher

In the not too distant past- the 1980s- rates were in the double digits. At an all time high, Freddie Mac tracked an October 1981 rate of 18.6%. At that time, the average mortgage rate based itself on a survey of conventional home purchase loans for borrowers who put 20% down and had excellent credit. But many buyers who didn’t fit those parameters paid even more.

It’s a tough pill to swallow when you want to buy a home in 2022 and are staring at 7% when mere months ago rates were half that. We can remind ourselves that rates throughout the 1980s were in the double digits. We can say, “Oh! It could be so much worse!” Sometimes that helps, sometimes it just makes us more frustrated. 

If you’re still intent on buying a home today, remember that, historically, rates have been much, much higher. Our buying power has changed since the 1980s and with the option for an adjustable rate mortgage, buying a home in 2022 is nowhere near impossible.