Freddie Mac recently posted an update on mortgage rates, noting that as of December 6, 2018, the recent trend toward rising rates was punctuated by a welcome pullback amid a steep sell-off in U.S. stocks. However, the informative chart that accompanies their report makes an interesting point that we believe is worth exploring.
This chart, while showing recent trends in mortgage rates, goes back much further – all the way to 1970. Despite the recent talk about rising rates, it is worth noting that even though current rates are up relative to the past 8 years, they are still lower than they were 30-years prior. For example, interest rates peaked in October 1981 at almost 19%, and during the 20-year period from 1973 to 1993 were over 8% – nearly twice the percentage at the time of the December 6 update.
From that perspective, interest rates are currently at a historic low, the lowest 10-year average in the last 42 years.
Even though recent financial news usually concerns rising rates, it is also worth mentioning that within these trends there are often pullbacks, such as the one referred to in the December 6 update.