Rates are cyclical. They go up and they go down and they go up again. If history and the charts below are a guide, then we optimistically anticipate we will see rates begin to fall as early as next year. Unfortunately, although we know that rates will come down at some point, we don’t know when. But this anticipation of lower rates in the future is one of the reasons we generally are not in favor of paying much in points for your rate.
You are not stuck with your mortgage rate forever. If rates drop significantly, homeowners can always refinance, and you should be happy to know that we keep tabs on loans we have closed for our clients, looking for opportunities to do either a low-cost or no-cost refinance in the future.
We enjoyed the lowest interest rates in history in 2020-2021 due to emergency actions taken by the Federal Reserve during the pandemic that brought rates down under 3.00%. But in 2022, supply chain issues, high prices, a strong economy, low unemployment, and inflation surging to four-decade highs caused the Federal Reserve to take aggressive actions, and we’ve seen rates rise quickly as a result. The 2022 rate hike cycle is the fastest in history.
The Fed is committed to hiking interest rates until inflation is under control. Mortgage interest rates are not directly controlled by the Fed, but when the Fed raises rates, money gets more expensive and pushes mortgage rates higher as well.
Once the Fed has inflation under control, we expect to see rates begin to fall. And the Fed’s actions could lead us into a recession, which would also bring mortgage interest rates down, making it nearly impossible to accurately predict what will happen to mortgage rates in late 2022, and into 2023 and beyond.
The 2 charts below will show you mortgage rates back to 1974, and prime rate which is directly impacted by the Fed’s actions, going back to 2001.
| Average 30-Year | Previous | Change | |
| Year | Mortgage Rate | Year | vs LY |
| 2022 | 7.12% | 2.96% | 4.16% |
| 2021 | 2.96% | 3.10% | -0.14% |
| 2020 | 3.10% | 3.94% | -0.84% |
| 2019 | 3.94% | 4.54% | -0.60% |
| 2018 | 4.54% | 3.99% | 0.55% |
| 2017 | 3.99% | 3.65% | 0.34% |
| 2016 | 3.65% | 3.85% | -0.20% |
| 2015 | 3.85% | 4.17% | -0.32% |
| 2014 | 4.17% | 3.98% | 0.19% |
| 2013 | 3.98% | 3.66% | 0.32% |
| 2012 | 3.66% | 4.45% | -0.79% |
| 2011 | 4.45% | 4.69% | -0.24% |
| 2010 | 4.69% | 5.04% | -0.35% |
| 2009 | 5.04% | 6.03% | -0.99% |
| 2008 | 6.03% | 6.34% | -0.31% |
| 2007 | 6.34% | 6.41% | -0.07% |
| 2006 | 6.41% | 5.87% | 0.54% |
| 2005 | 5.87% | 5.84% | 0.03% |
| 2004 | 5.84% | 5.83% | 0.01% |
| 2003 | 5.83% | 6.54% | -0.71% |
| 2002 | 6.54% | 6.97% | -0.43% |
| 2001 | 6.97% | 8.05% | -1.08% |
| 2000 | 8.05% | 7.44% | 0.61% |
| 1999 | 7.44% | 6.94% | 0.50% |
| 1998 | 6.94% | 7.60% | -0.66% |
| 1997 | 7.60% | 7.81% | -0.21% |
| 1996 | 7.81% | 7.93% | -0.12% |
| 1995 | 7.93% | 8.38% | -0.45% |
| 1994 | 8.38% | 7.31% | 1.07% |
| 1993 | 7.31% | 8.39% | -1.08% |
| 1992 | 8.39% | 9.25% | -0.86% |
| 1991 | 9.25% | 10.13% | -0.88% |
| 1990 | 10.13% | 10.32% | -0.19% |
| 1989 | 10.32% | 10.34% | -0.02% |
| 1988 | 10.34% | 10.21% | 0.13% |
| 1987 | 10.21% | 10.19% | 0.02% |
| 1986 | 10.19% | 12.43% | -2.24% |
| 1985 | 12.43% | 13.88% | -1.45% |
| 1984 | 13.88% | 13.24% | 0.64% |
| 1983 | 13.24% | 16.04% | -2.80% |
| 1982 | 16.04% | 16.63% | -0.59% |
| 1981 | 16.63% | 13.74% | 2.89% |
| 1980 | 13.74% | 11.20% | 2.54% |
| 1979 | 11.20% | 9.64% | 1.56% |
| 1978 | 9.64% | 8.85% | 0.79% |
| 1977 | 8.85% | 8.87% | -0.02% |
| 1976 | 8.87% | 9.05% | -0.18% |
| 1975 | 9.05% | 9.19% | -0.14% |
The Fed does not directly increase mortgage rates, but mortgage rates do rise when the Fed raises rates. Here you can see Fed rate changes since 1974 and the resulting impact on the Prime Rate, which IS directly impacted.
| Year | Effective Date | Change | Prime Rate |
| 2022 | 9/22/2022 | 0.75% | 6.25% |
| 2022 | 7/28/2022 | 0.75% | 5.50% |
| 2022 | 6/16/2022 | 0.75% | 4.75% |
| 2022 | 5/5/2022 | 0.50% | 4.00% |
| 2022 | 3/17/2022 | 0.25% | 3.50% |
| 2020 | 3/16/2020 | -1.00% | 3.25% |
| 2020 | 3/4/2020 | -0.50% | 4.25% |
| 2019 | 10/31/2019 | -0.25% | 4.75% |
| 2019 | 9/19/2019 | -0.25% | 5.00% |
| 2019 | 8/1/2019 | -0.25% | 5.25% |
| 2018 | 12/20/2018 | 0.25% | 5.50% |
| 2018 | 9/27/2018 | 0.25% | 5.25% |
| 2018 | 6/14/2018 | 0.25% | 5.00% |
| 2018 | 3/22/2018 | 0.25% | 4.75% |
| 2017 | 12/14/2017 | 0.25% | 4.50% |
| 2017 | 6/15/2017 | 0.25% | 4.25% |
| 2017 | 3/16/2017 | 0.25% | 4.00% |
| 2016 | 12/15/2016 | 0.25% | 3.75% |
| 2015 | 12/17/2015 | 0.25% | 3.50% |
| 2008 | 12/16/2008 | -0.75% | 3.25% |
| 2008 | 10/29/2008 | -0.50% | 4.00% |
| 2008 | 10/8/2008 | -0.50% | 4.50% |
| 2008 | 4/30/2008 | -0.25% | 5.00% |
| 2008 | 3/18/2008 | -0.75% | 5.25% |
| 2008 | 1/30/2008 | -0.50% | 6.00% |
| 2008 | 1/22/2008 | -0.75% | 6.50% |
| 2007 | 12/11/2007 | -0.25% | 7.25% |
| 2007 | 10/31/2007 | -0.25% | 7.50% |
| 2007 | 9/18/2007 | -0.50% | 7.75% |
| 2006 | 6/29/2006 | 0.25% | 8.25% |
| 2006 | 5/10/2006 | 0.25% | 8.00% |
| 2006 | 3/28/2006 | 0.25% | 7.75% |
| 2006 | 1/31/2006 | 0.25% | 7.50% |
| 2005 | 12/13/2005 | 0.25% | 7.25% |
| 2005 | 11/1/2005 | 0.25% | 7.00% |
| 2005 | 9/20/2005 | 0.25% | 6.75% |
| 2005 | 8/9/2005 | 0.25% | 6.50% |
| 2005 | 6/30/2005 | 0.25% | 6.25% |
| 2005 | 5/3/2005 | 0.25% | 6.00% |
| 2005 | 3/22/2005 | 0.25% | 5.75% |
| 2005 | 2/2/2005 | 0.25% | 5.50% |
| 2004 | 12/14/2004 | 0.25% | 5.25% |
| 2004 | 11/10/2004 | 0.25% | 5.00% |
| 2004 | 9/21/2004 | 0.25% | 4.75% |
| 2004 | 8/10/2004 | 0.25% | 4.50% |
| 2004 | 6/30/2004 | 0.25% | 4.25% |
| 2003 | 6/27/2003 | -0.25% | 4.00% |
| 2002 | 11/7/2002 | -0.50% | 4.25% |
| 2001 | 12/12/2001 | -0.25% | 4.75% |
| 2001 | 11/7/2001 | -0.50% | 5.00% |
| 2001 | 10/3/2001 | -0.50% | 5.50% |
| 2001 | 9/17/2001 | -0.50% | 6.00% |
| 2001 | 8/22/2001 | -0.25% | 6.50% |
| 2001 | 6/28/2001 | -0.25% | 6.75% |
| 2001 | 5/16/2001 | -0.50% | 7.00% |
| 2001 | 4/19/2001 | -0.50% | 7.50% |
| 2001 | 3/21/2001 | -0.50% | 8.00% |
| 2001 | 2/1/2001 | -0.50% | 8.50% |
| 2001 | 1/4/2001 | 0.25% | 9.00% |