The typical interest rate for a mortgage

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The typical interest rate for a mortgage
Mortgage rates fell sharply during the Great Recession, but are rebounding. (graph image by Lulla from

Mortgage interest rates have fluctuated greatly over the decades, hitting historical highs and dipping down to all-time lows. However, by analysing different periods of time, you can get an idea of what a typical mortgage interest rate would have been and what it might be in the future. But it is impossible to pick one number that you can expect as a typical rate.

Influences on Rates

Mortgages rates will move with the economy. If the economy is healthy and well, interest rates will be higher as people can better afford to take on higher rates. However, as seen during the Great Recession, when the economy tanks, interest rates will go down as people are less inclined to take on loans. Confidence in capital markets plays an important role in increasing or lowering interest rates.


The 1980s saw the highest rates for a 30-year fixed-rate mortgage in the last half of the 20th century. From October 1981 to October 1982, rates increased from about 14 per cent to 18 per cent. By the mid-'80s, interest rates cooled off to around 12 per cent. By the end of the decade, interest rates for a 30-year fixed-rate mortgage came down to around 10 per cent, which is where rates were when the decade started.


In the 1990s, interest rates for a 30-year fixed-rate mortgage mostly stayed in the 7 to 8 per cent range. The most notable exception was in late 1994 when rates got close to 9.5 per cent. A 15-year fixed-rate mortgage was only slightly lower over the same time. A one-year adjustable rate mortgage fluctuates greatly in comparison to fixed-rate terms, going from as high as nearly 7.5 per cent to as low as nearly 4 per cent.


The start of the new millennium saw the highest mortgage interest rates. A 30-year fixed-rate mortgage could be had for around 8.5 per cent in 2000 before staying in the 5.5 to 6.5 per cent range. One-year adjustable-rate mortgages fell to below 3.5 per cent in the middle of the first decade before quickly jumping up to around 5.5 per cent from 2006 to 2008. The Great Recession then saw rates plummet to all-time lows: around 4.25 per cent for a 30-year fixed-rate term and below 3.5 per cent for a one-year adjustable term.

Where Will Rates Go?

As the economy improves, it can only be expected that mortgage rates will increase, for 30-year and 15-year fixed-rate mortgages and all adjustable rate mortgages. Mortgage rates began to rebound in late 2010. If the economy worsens or suffers a setback, expect the typical mortgage rate to stay in a low range. If the federal government decides to once again invest in mortgage companies, rates could stay low so that more people would be encouraged to buy new homes.

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