Calling All Home Buyers: Let's Get Real About Interest Rates

If you love your house, don't have to move, and snagged a 3% interest rate during the halcyon days of 2019, we would be nuts to tell you to move, so sit tight. However, that's just not the case for most of us, so let's explore the long-term trends in mortgage rates, acknowledging their current levels while considering their historical trajectory from the 1970s to today.

Historical Trends

Over the past few decades, mortgage interest rates have experienced fluctuations, reflecting economic conditions and monetary policies. When examining long-term trends, it becomes evident that mortgage rates have generally followed a downward trajectory.

During the 1970s and early 1980s, the United States faced economic challenges, including high inflation and oil crises. Consequently, mortgage rates skyrocketed, reaching unprecedented levels. Rates reached as high as 18%, significantly impacting homeownership affordability.

As the economy stabilized and inflation was brought under control in the 1990's and 2000's, interest rates began a gradual decline. The Homebuyers witnessed relatively lower mortgage rates, often hovering around 6-8%. This period was marked by a favorable environment for homebuyers, stimulating increased demand in the real estate market.

The 2008 financial crisis had a profound impact on the global economy, leading to a significant drop in mortgage rates. Central banks implemented monetary policies that stimulated economic growth, resulting in historically low rates. In the aftermath of the crisis, mortgage rates reached all-time lows, with some rates dipping below 4%. This unprecedented environment fueled a surge in refinancing and home purchases. 

In recent years, interest rates have gradually increased from their historic lows. The Federal Reserve's decision to normalize monetary policy and the anticipation of economic growth have contributed to this trend. As a result, mortgage rates have risen, albeit still remaining relatively low compared to historical averages.

So What Does That Mean for Me in Today's Real Estate Market?

While current mortgage rates are undeniably higher than they have been in the recent past, it is essential to view them within the context of historical trends. Homebuyers can still take advantage of historically low rates, making homeownership more accessible. 

That's especially critical in Pittsburgh, a rare US Metro where buying is still more affordable than renting.  Downpayment assistance programs are a critical piece of this puzzle, and there are over 2000 programs to do just that. Here's 1 of many 2023 writeups  that dig into home buyer assistance programs unique to this region.