Mortgage interest Rates Chart HistoryMortage Interest Chart History
You know what the mortgage rates were like in the 1900s? Thirty-year fixing averages 3.31% in the weekly period ending 21 November 2012, the low point in history.
Later the 15-year fixing reached its low point of all time and fell to 2.56% in the weekly period ending May 2, 2013. The above numbers both come from Freddie Mac's Primary Mortgage Market Survey, which has only existed since 1971. According to the log, back in April 1971, the first month they began pursuing 30-year mortgage rate fixes, the federal average was 7.31%.
Freddie Mac has only been following the 15-year fixing since September 1991, when rates were 8.69% on average. During the same period, the 30-year average interest rate was 9.01%. Anyways, I recall a while back when Fixed rates were in the low 4% range saying that the medias carried on about how rates hadn't been that low since the 1950s. What's more, the rate was not as low as the year before.
I' ve never really taken the trouble to see how low the prices were back then, but I eventually opted to dig something to get a little more information. This led me to several out-of-print books of the National Bureau of Economic Research, which seems to have the best results.
As you can see, back then there were different kinds of mortgage, not like those used today. Whilst I don't know when the very first 30-year fixed-rate mortgage was established and granted (someone please let me know), it was assumed that it was widely distributed in the fifties, which is why the press refer to this ten-year period.
Prior to that, it was customary for businesses such as corporate banking and assurance firms to grant short-term ballon mortgage facilities, often with maturities of only three to five years, which were continuously funded and never disbursed. Those were also subscribed at LTV conditions of about 50%, which means that it was quite hard to get a home mortgage.
Later on, as soon as the global economic crisis hit, house values collapsed and many forced auctions swamped the residential property markets because no one could allow themselves to make large mortgage repayments, especially when they had no work. FDR's New Deal then came, which featured the Home Owners' Loan Corporation (HOLC) and the National House Act of 1934, both of which were designed to make living more accessible.
HOLC, founded in 1933, could help explaining why long-term fixed-rate credits exist today. HOLC's objective was to re-finance these old ballon mortgage facilities into long-term, fully amortised credits with maturities of 20 to 25 years each. Mortgage rates have decreased over the years, while LTV rates and credit conditions have risen, as you can see from the diagrams below.
Whilst it is difficult to get an apple-to-apple mortgage rate benchmark before the emergence of the 30-year fix rate, the National Bureau of Economic Research has a chart that details interest rates from 1920 to 1956. Between about 1920 and 1934, the average rate for traditional mortgages was just under 6% and then fell to a low of just under 4.5%.
That is probably the point of departure the instrumentality use when they say the tax were not so low in 60 gathering. But it is not clear what kind of mortgage these were over this long span and when 30-year fixing actually became the norm. Prior to blogging, Colin worked as an advisor to a mortgage financier in Los Angeles.
He' been passionate about mortgage lending for 12 years.