Mortgage rates history: How rates have changed and why
To understand where mortgage rates might go, it helps to know where they’ve been. The history of mortgage rates is full of ups and downs that have reflected the political and economic situations of the times. Knowing how these changes work and how they have played out over time, can give you a better idea of how the housing market works and what factors affect your personal mortgage rate.
When did mortgage rates start?
Modern mortgages, as we know them, began in America in the 1930's. The concept existed long before however, and Europe had an established history of money lending practices that were brought to the American colonies.
Why modern mortgages were created
The Great Depression greatly changed the lending industry in the U.S. Between 1931 and 1935, foreclosures devastated the housing market, with millions of people in danger of foreclosing on their homes. When property values collapsed, borrowers couldn't refinance or sell to pay off their loans.
President Franklin D. Roosevelt's administration revolutionized mortgage lending by creating the Federal Housing Administration in 1934. The FHA introduced 20 to 30-year loan terms, lower down payments, and the concept of a government-backed mortgage. By insuring the mortgage, the government made lending less risky for lenders. This encouraged them to lend to more borrowers.
However, shortly after its creation, the FHA also established the practice known as redlining. Redlining was a practice that formalized racial discrimination in mortgage lending by systematically excluding Black and Hispanic Americans from receiving home loans (among other financial services). So, while the creation of government-backed loans has been able to increase homeownership rates for Americans, this benefit was not experienced equally by all Americans at the time.
After the FHA was created and began lending, Fannie Mae was established in 1938 to buy these FHA-guaranteed loans, creating the secondary mortgage market and making home financing more accessible.
Tracking mortgage rate history
In the 1970s, Congress created Freddie Mac, another entity that buys mortgages, similar to Fannie Mae. Freddie Mac began systematically tracking mortgage rates in April 1971 with its Primary Mortgage Market Survey. This weekly survey provides the historical mortgage rate data we reference today. Since 1971, 30-year fixed mortgage rates have averaged just under 8%, though they’ve fluctuated dramatically.
Historical mortgage rates: 1971 to 2025
The 1970s: Freddie Mac began tracking the 30-Year Fixed-Rate mortgage rate in 1971. At that point it averaged around 7.5%. Stagflation drove mortgage rates steadily upward throughout the decade and by 1979, average rates hit 11.2% as inflation and economic uncertainty plagued the economy.
October 1981: Mortgage rates reached an all-time high of 18.4% in October 1981. The annual average topped at 16.63% as the Federal Reserve aggressively fought inflation. They then fell back down to end the decade around 10%.
The 1990s: Mortgage rates continued to change with the large economic shifts of the 1990s including the dot-com bubble. Bond prices got higher and mortgage rates dropped to an average of around 10% in 1990 to an average of nearly 7% in 1998.
The 2000s: Mortgage rates dropped to 5% to 6% in the early 2000s, fueling a housing boom. However, the 2008 financial crisis brought the Great Recession. The Federal Reserve slashed rates to near zero, pushing mortgage rates down to approximately 5% by 2009.
The 2010s: Mortgage rates continued to fall through the 2010s, dropping to just below 5% in 2010 and down to around 4% by 2019.
The 2020s: Home loan rates reached their lowest point ever at 2.65%, in January of 2021, driven by the Federal Reserve's response to the COVID-19 global pandemic. This sparked unprecedented refinancing activity and homebuying.
As post pandemic inflation continued, the Fed raised rates aggressively starting in 2022. Mortgage rates climbed from near 3% to around 8% by 2023, marking one of the fastest increases in history.
By the end of 2025, the 30-year fixed mortgage rate was around 6.25%.
Understanding mortgage rates today
Today's mortgage interest rates remain below the historical average when viewed across five decades of data. The story of mortgage rates mirrors America's economic journey, from Depression-era reforms to financial crises, the pandemic, and multiple recovery periods in between.
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