Mortgage Interest Rates Over Time

By Michelle Clardie on 11/18/2023.
Reviewed by Dan Gatsby .
Mortgage interest rates have been making headlines over the last two years. As interest rates were increased to combat out-of-control inflation, media outlets were quick to assert that higher rates make new real estate acquisitions less desirable. 

It’s true that interest rates have an impact on real estate investing. Higher rates mean that the cost of borrowing money is up. This means you have less buying power; more of your dollars have to go toward interest rather than repaying the principal loan balance. 

But, when taken in context, today’s rates aren’t as unreasonable as the headlines may lead you to believe. 

In this article, we’re taking an honest look at mortgage interest rates over time. We’ll also tell you how to get the lowest possible rate, regardless of market conditions! 

Mortgage Interest Rates Over Time


Let’s start with a look at what many media sources are presenting as the interest rate trend line. Here is a graph showing the 30-year fixed mortgage interest rate since 2020:



Yikes! This view makes it look like interest rates have skyrocketed beyond reason. But watch what happens when we look at a longer period of time. If we expand the graph to show rates since 2000, this is what we see:



This presents a much different narrative, right? When we have more information available, we can see that mortgage interest rates are returning to more normal levels. But because rates have increased so quickly, we feel the pinch more sharply than if they had gradually increased over time. 

Now, what happens if we take a big-picture look at mortgage interest rates over time? This data set goes back to July of 1971. Here’s what that graph looks like:



This is the most complete picture we have of interest rates over time. From this view, it’s clear that the last 10 years have not been representative of normal interest rates. They have been excessively low from a historical perspective. Today’s rates (around 7.5% as of the date of this article) are not only reasonable, but they are a full 10 percentage points below the rate homebuyers were paying in the early 1980s!

Interestingly, we all envy those who purchased property in the 80s. After all, they may have paid $50,000 for a home that’s worth over $500,000 today. Imagine if one of those buyers had decided to continue renting until interest rates fell below 5%. They would have lost out on so much equity! If you were to wait for interest rates to return below 5%, how would your future self-regard your decision?   

This is why it is inadvisable to attempt to time the market. Buying when interest rates are low could mean paying peak home prices. And buying when rates are high could mean buying when prices are stable, or even temporarily lower than normal. And without a crystal ball to tell you exactly when rates or prices are peaking or hitting bottom, it’s impossible to time your deals just right. 

The best time to buy property is always five years ago. The second-best time is always today.      

What Today’s Interest Rates Mean for Buyers, Sellers, and Investors


For homebuyers and investors, today’s rates mean more of their budget is allocated to interest payments than to the principal loan amount. But there is some good news: The higher interest rates may mean less competition. When rates were below 5%, There was extreme demand. Buyers were rushing into deals, waiving contingencies, getting into bidding wars, and paying more than the asking prices. Today’s market leaves more breathing room and a bit more negotiating leverage for buyers and investors.

For home sellers, today’s interest rates mean that there isn’t a flood of buyers ready to grab up any property. Sellers need to work a bit harder to convince buyers that their property is worth the investment. This might mean staging the property to invoke a strong emotional reaction to the home or rethinking the marketing strategy to reach more prospective buyers.   

You Are Never Truly “Locked” Into a Mortgage Interest Rate


If you’re a buyer or investor who is concerned about today’s interest rates, it’s important to remember that rates can change, and you can take advantage of rate changes as a property owner. 

You could, for example, choose an adjustable-rate mortgage (ARM). With an ARM, your interest rate automatically adjusts with market rate changes. This way, if rates go down in the future, your monthly payment will automatically reflect the lower rate. 

Alternatively, you could stick with a fixed-rate mortgage, and then refinance your mortgage loan if rates drop in the future. Refinancing simply replaces your existing home loan with a new loan under new terms. There are fees associated with refinancing, but the savings in interest expense could easily offset those fees. And with a fixed-rate mortgage, you get the benefit of stable mortgage payments, unaffected by changing interest rates, and a guarantee that your rate won’t go any higher than your fixed rate.  

How to Get the Lowest Possible Interest Rate


While today’s rates are more in line with what the historical market would consider “normal,” buyers and investors should still take care to find the lowest interest rate possible to avoid unnecessarily high interest expenses.

Here are five quick tips to help you get the best possible interest rate under any market conditions.  

  1. Keep your credit score as high as possible. High credit scores indicate a lower risk of late payments and defaults for lenders, so lenders provide favorable terms to those with excellent credit.   
  2. Shop multiple lenders to compare rates. You might work with a mortgage broker who can help you get multiple quotes with a single application. 
  3. Consider different loan types. For example, 15-year mortgages may offer lower rates than 30-year mortgages. Or, if you are a military service member or veteran, you might qualify for a low-interest VA loan if purchasing a property you will live in (this even applies to small multi-family properties, as long as you live in one unit; renting out the other units to offset your mortgage payments is an excellent house hack).  
  4. Increase your down payment, if possible. Many lenders are willing to offer a lower rate to those who put more money down upfront. 
  5. Buy mortgage points. Mortgage points (also called “discount points”) allow borrowers to pay an upfront fee to effectively buy down the interest rate. In most cases, paying 1% of the loan amount will buy you one mortgage point, which will reduce the interest rate by .25%. 


Navigate Mortgage Interest Rates with Gatsby Investment


Gatsby Investment is a California-based real estate investment company that specializes in making unique deals available to investors through real estate syndication. Similar to crowdfunding, syndication allows investors to buy into hand-selected opportunities, earning passive returns while the syndicate sponsor handles every detail, including financing.   

With our industry contacts and high volume of developments and rentals, we can secure favorable mortgage interest rates for our projects. This means a better bottom line for our investors. Our financing strategy is just part of the reason we have been able to establish a strong track record of earning annualized returns of over 20% on average.

If you’re looking for strong return potential, without the hassle of scouring the market for the best properties and the best interest rates, consider investing in one of our expertly-analyzed real estate investment opportunities today!

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