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Historical Mortgage Rates: Averages and

Trends from the 1970s to 2020
updated June 12, 2020 • by Denny Ceizyk

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Since 1971, historical mortgage rates for 30-year !xed loans have hit historic
highs and lows due to various factors. Using data from Freddie Mac’s Primary
Mortgage Market Survey (PMMS), we’ll do a deep dive into what’s driven
historical mortgage rate movements over time, and how they a"ect buying or
re!nancing a home.

• Historical mortgage rates: 1971 to 2020

• 30-year !xed rates vs. 15-year !xed rates
• Fixed-rate vs. adjustable-rate mortgages
• How historical mortgage rates a"ect homebuying
• How historical mortgage rates a"ect re!nancing

Historical mortgage rates: 1971 to 2020

In 1971, the same year when Freddie Mac started surveying lenders, 30-year
!xed-rate mortgages hovered between 7.29% to 7.73%. The annual average rate
of in#ation began rising in 1974 and continued through 1981 to a rate of 9.5%.
As a result, lenders increased rates to keep up with unchecked in#ation, leading
to mortgage rate volatility for borrowers.

The Federal Reserve combated in#ation by increasing the federal funds rate, an
overnight benchmark rate that banks charge each other. Continued hikes in the
fed funds rate pushed 30-year !xed mortgage rates to an all-time high of
18.63% in 1981. Eventually, the Fed’s strategy paid o", and in#ation fell back to
normal historical levels by October 1982. Home mortgage rates remained in the
single-digits for much of the next two decades.

The mortgage rates trend continued to decline until rates dropped to 3.31% in
November 2012 — the lowest level in the history of mortgage rates. To put it
into perspective, the monthly payment for a $100,000 loan at the historical peak
rate of 18.63% in 1981 was $1,558.58, compared to $438.51 at the historical low
rate of 3.31% in 2012.
This year, interest rates are expected to stay around 3.8%, according to Freddie
Mac. This is good news for consumers as home prices continue to rise.

Historical Interest Rates for 30-Year Fixed-Rate Mortgages: Annual Averages, 1971-2019

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Year Lowest Rate Highest Rate Average Rate

2019 3.63% 5.34% 4.25%

2018 3.95% 4.94% 4.54%

2017 3.78% 4.30% 3.99%

2016 3.41% 4.32% 3.65%

2015 3.59% 4.09% 3.85%

2014 3.80% 4.53% 4.17%

2013 3.34% 4.58% 3.98%

2012 3.31% 4.08% 3.66%

2011 3.91% 5.05% 4.45%

2010 4.17% 5.21% 4.69%

2009 4.71% 5.59% 5.04%

2008 5.10% 6.63% 6.03%

2007 5.96% 6.74% 6.34%

2006 6.10% 6.80% 6.41%

2005 5.53% 6.37% 5.87%

2004 5.38% 6.34% 5.84%

2003 5.21% 6.44% 5.83%

2002 5.93% 7.18% 6.54%

2001 6.45% 7.24% 6.97%

2000 7.13% 8.64% 8.05%

1999 6.74% 8.15% 7.44%

1998 6.49% 7.22% 6.94%

1997 6.99% 8.18% 7.60%

1996 6.94% 8.42% 7.81%

1995 7.11% 9.22% 7.93%

1994 6.97% 9.25% 8.38%

1993 6.74% 8.07% 7.31%

1992 7.84% 9.03% 8.39%

1991 8.35% 9.75% 9.25%

1990 9.56% 10.67% 10.13%

1989 9.68% 11.22% 10.32%

1988 9.84% 10.77% 10.34%

1987 9.03% 11.58% 10.21%

1986 9.29% 10.99% 10.19%

1985 11.09% 13.29% 12.43%

1984 13.14% 14.68% 13.88%

1983 12.55% 13.89% 13.24%

1982 13.57% 17.66% 16.04%

1981 14.80% 18.63% 16.64%

1980 12.18% 16.35% 13.74%

1979 10.38% 12.90% 11.20%

1978 8.98% 10.38% 9.64%

1977 8.65% 9.00% 8.85%

1976 8.70% 9.10% 8.87%

1975 8.80% 9.60% 9.05%

1974 8.40% 10.03% 9.19%

1973 7.43% 8.85% 8.04%

1972 7.23% 7.46% 7.38%

 1971 7.29% 7.73% 7.54%

Overall 3.31% 18.63% 8.00%

Comparing 30-year !xed rates vs. 15-year !xed

rates

Looking at interest rates over time, 30-year !xed mortgage rates have always
trended slightly higher than 15-year interest rates. That’s because the lender
takes on extra risk that you might default over a longer period of time.
Comparing a 30-year mortgage rates chart and a 15-year mortgage rates chart,
you’ll see that rates remain near historic lows.
Historical Mortgage Rates by Term Length, 1991-2019

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Homebuyers often choose a 30-year !xed mortgage for the stability of a !xed,
low monthly payment. The higher rate and longer loan term result in higher
lifetime interest charges.

Fifteen-year !xed mortgage rates, however, are typically lower. That means you
pay less interest over the life of the loan. The shorter repayment schedule
increases your principal and interest payments, though.

Lenders o"er more than just 30- and 15-year terms. You may !nd 10- to 40-
year terms at some lenders.

Below is an example of the cost di"erence between a 15- and 30-year !xed
mortgage at current mortgage rates.
 Term Loan Interest Monthly Total Payment Interest
Length Amount Rate Payment Interest Savings Savings

15 Years $250,000 ˟3.04% ˟˟$1,731.27 $61,628.17 $0 $97,552.65

30 Years $250,000 ˟3.6% ˟˟$1,136.61 $159,180.82 $594.66 $0

˟Freddie Mac PMMS reported interest rates as of Jan. 23, 2020

˟˟Principal and interest only. Does not include mortgage insurance, property taxes,
homeowners insurance or HOA fees.

Fixed-rate loans vs. adjustable-rate mortgages

Average rates for !ve-year adjustable-rate-mortgages (ARMs) have historically

o"ered lower initial rates than 30-year !xed-rate mortgages. If you compare
mortgage rates since 2005, 5-year ARM rates have trended lower than 30-year
!xed rates. Interest rates for ARMs are 0.37 percentage points lower than !xed-
rate mortgages through 2019.
Historical Mortgage Rates: 30 Year Fixed vs. 5-1 Hybrid ARM, 2005-2019

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With lower initial interest-rate periods available from three to 10 years, ARMs
could o"er short-term savings for homebuyers. If !xed rates are lower, though,
it makes sense to consider re!nancing your ARM to a !xed loan before the ARM
resets.

The savings o"ered with an ARM are temporary. Once the initial low-rate period
expires, the rate will adjust based on the index and margin you agreed to, and
can’t rise above a certain level, called a cap.

The index is the moving part of your ARM and is tied to a benchmark rate. The
margin is the !xed part and is added to the index to determine your rate after
the initial-rate period passes.
For example, a 5/1 ARM loan with 2/2/6 caps means:

• The !rst adjustment can’t exceed 2% above the initial rate.

• The second adjustment can’t exceed 2% per year for subsequent
adjustments.

• The maximum rate increase is 6% above the start rate for the life of the
loan.

How historical mortgage rates a"ect homebuying

When mortgage rates are lower, buying a home is more a"ordable. A lower
payment may also help you qualify for a more expensive home. The Consumer
Financial Protection Bureau (CFPB) recommends keeping your total debt,
including your mortgage, to 43% of what you earn before taxes (known as your
debt-to-income ratio, or DTI).

When rates are higher, an ARM may give you temporary payment relief if you
plan to sell or re!nance before the loan resets. Ask your lender about
convertible-ARM options that allow you to convert your loan to a !xed-rate
mortgage without having to re!nance before the !xed-rate period expires.

How historical mortgage rates a"ect re!nancing

When mortgage interest rates slide, re!nancing becomes more attractive to

homeowners. A re!nance replaces your current loan with a new loan, typically
at a lower rate. The extra monthly savings could give you wiggle room in your
budget to pay down other debt or boost your savings.

If the equity in your home has grown, you can tap it with a cash-out re!nance
and make home improvements. With this type of re!nance, you’ll take on a loan
for more than you owe. You can use the extra as cash to make home
improvements or pay o" other debt. Lower rates may help minimize the larger
monthly payment.

When rates go up, there’s less !nancial bene!t to re!nancing. Another caveat to
re!nancing, in general, is ensuring that you stay in your home long enough to
recoup closing costs. To do this, divide the total loan costs by your monthly
savings. The result tells you how many months it takes to recoup re!nance
costs, called the breakeven. The quicker you reach your breakeven, typically, the
more cost-e"ective the re!nance becomes.

Denny Ceizyk is a 25-year veteran of the mortgage industry. He has worked in all facets of
home loans starting in loan processing and ultimately owning and operating a mortgage
brokerage company for 18 years. Denny has written and presented to government
housing, local media and national media about mortgage !nancial literacy. He graduated
from the University of Arizona with a degree in Media Arts and Business, and recently
relocated to New York City where he lives with his wife and daughter.

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