Are mortgage rates really as low as all the hype? See for yourself in this chart of average annual interest rates on 30-year fixed rate mortgages since 1971… data from Freddie Mac.
Freddie Mac's data doesn't start until 1971 but I was curious about what rates were before then. I found Fannie Mae data that goes back to 1963, but it is an average of all conventional single-family mortgages regardless of terms so they tend to be a little lower. Rates were 5.8 – 5.9 in 1963-1965, then yearly average didn't drop below 6 again until 2003. This data stopped at 2008.
Ok, I was still curious about going back further than that but didn't have much luck with anything consistent. I did find prime rate data going back to 1947, when the prime rate was 1.75, lower than the current prime rate of 3.25 which started back in December 2008. The last time the prime rate was 3.25 was August 4, 1955!
Bottom line is, rates hovering around 5% are mighty good… which translates to buying more house for the same monthly payment.
With a 5% down payment and a monthly mortgage principal and interest payment of about $1,275 you could buy a $250,000 house at 5% interest, but only a $224,000 house at 6% interest.
Sharlene Hensrud, RE/MAX Results - Email – HomesMSP.com
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