Rates Through The Ages From 1968 to 1980
In 1968, the mortgage rates were 8.5% but they went down to 7% the following year. Homeowners could buy a home that was 15% to 20% larger home with the same mortgage if they could find someone to assume the payments. Federal Housing Administration and Veteran Affairs mortgages were very popular in certain price ranges and they allowed buyers to assume the mortgage regardless of the credit. Therefore, if you could get someone to take over your payments, you were free to qualify for another mortgage.
Rates From 1981 to 1999
In 1981, mortgage rates reached a whopping 18.63%. A quarter of a million dollars of mortgage had a monthly principal and interest payment of nearly four thousand dollars. As crazy as that rate sounds, people were still buying homes; they were good investments. Four years later, the rates were going down but they were still over 12%.
The monthly payment from our previous example would now be twenty-five hundred. Home owners happy to be paying only two thirds what they had to pay a few years earlier and that was a good thing. Fast forward to late 1991 when the rates went below 9%—that same payment was down to two thousand dollars a month.
Mortgage Rates in the 21st Century
Rates during this time were 8.15% and that made the payment of a quarter of a million dollars of mortgage less than two thousand dollars a month. Rates were even lower in 2008 at 6.04%. By 2009, mortgage rates had fallen below 5%. The lowest mortgage rate was 3.31% on November 2012 with a payment one thousand dollars via our previous example.
As you can see, rates fluctuate and most of the experts are expecting rates to be above 5% by the end of this year. Rates have been historically low for a long period but will probably continue to go up. Based on history, even 8% would be an excellent rate for home owners. Until it reaches that point again, everything lower is a bargain.
