![]() Over time, mortgage interest rates came down while LTV ratios and loan terms increased, as you can see from the charts below. All of these entities essentially expanded credit availability and led to more liberal lending standards. Homeownership became more affordable over timeĪ year later, the FHA and the Federal Savings and Loan Insurance Corporation were created, and in 1938, Fannie Mae was born.Rates Came Down as Loan Terms and LTVs Increased The purpose of the HOLC was to refinance those old balloon mortgages into long-term, fully amortized loans, with terms typically ranging from 20 to 25 years. The HOLC, established in 1933, could explain why long-term fixed-rate mortgages are in existence today. Then came FDR’s New Deal, which included the Home Owners’ Loan Corporation (HOLC) and the National Housing Act of 1934, both of which aimed to make housing more affordable. ![]() Later, once the Great Depression struck, home prices nosedived and scores of foreclosures flooded the housing market because no one could afford to make large payments on their mortgages, especially if they didn’t have jobs. These loans were also underwritten at LTV ratios around 50%, meaning it was pretty difficult to get a home loan. ![]() While I don’t know when the very first 30-year fixed mortgage was created and issued (someone please tell me), they were believed to become widespread in the 1950s, which is why media references that decade.īefore that time, it was common for entities like commercial banks and life insurance companies to issue short-term balloon mortgages, often with terms as short as three to five years, which would be continually refinanced and never paid off. You see, back then there were different types of mortgages, not like the ones used today. Unfortunately, the details are still quite murky at best. That brought me to several out-of-print volumes from the National Bureau of Economic Research, which seems to have the best records out there. And rates reached a low around 1945 before hitting new lows in 2012.The 30-year fixed gained in popularity around the 1950s.But the best records only go back to the early 1970s.Mortgage rate history stretches back nearly a century.I never really took the time to see how low rates were back then, but I finally decided to do some digging to get a little more information. In that same month the 30-year fixed averaged 9.01%.Īnyway, I remember a while back when fixed rates were in the low 4% range that the media was going on about how rates hadn’t been this low since the 1950s. The 15-year fixed has only been tracked by Freddie Mac since September 1991, when rates averaged 8.69%. Note that the graph above charts rates based on their January average of each year, so it appears they don’t exceed 18%. It went as high as 18.45% in October 1981 and as low as 3.31% in November 2012. Prior to the 70s and earlier on the century to gain more perspectiveīoth figures above come from Freddie Mac’s Primary Mortgage Market Survey, which only dates back to 1971.įor the record, back in April of 1971, the first month they began tracking 30-year fixed mortgage rates, the national average was 7.31%.I wanted to drill down a bit deeper to see what things were like.Unfortunately, it only goes back to the year 1971.Most mortgage rate statistics are tied to Freddie Mac’s archive.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |