How Low Are Mortgages Rates Right Now?
Didier Malagies • July 23, 2020
How Low are Mortgage Rates Right Now?
Jordan Borchard posted in
Housing in Housing News
How Low Are Mortgage Rates Right Now? Just Look at the Sky-High Numbers From the ’80's and 90's
Written by: Brenda Richardson
Traditionally, proposals and parenthood lead to home purchases. With interest rates below 3%, however, mortgage prices may join the list.
Economic uncertainty surrounding the coronavirus pandemic has driven mortgage rates to numerous record-lows since March. During the week ending July 16 average rates hit 2.98%, dropping below 3% for the first time. As a result, purchase applications are up 16% from a year ago and refinance applications are up 107%, according to the Mortgage Bankers Association.
“The record-low level of fixed-rate mortgage rates is good news for all home buyers, and particularly for first-time home buyers, many of whom have been renting in multifamily buildings and want to move to a single-family home during the pandemic,” said Frank Nothaft, chief economist for property analytics provider CoreLogic. “First-time home buyers have responded to the enhanced affordability of lower mortgage payments by stepping up purchases from a year ago.”
For instance, Hunter Stuart and his wife decided to give up the three-bedroom Chicago apartment they’d been renting since 2017 and buy a place in the suburbs in June. A growing family—their second child is due to arrive in September— was only part of what motivated the Stuarts to become homeowners. “We got a pretty good price on the house, and the interest rate being low was definitely a motivating factor,” said Stuart, who took out a 30-year loan with a fixed rate of 3.25%.
Rates this low would have been unimaginable when the parents and grandparents of today’s first-time buyers were entering the housing market. “Depending how much history you’re using as your judge for mortgage rates can make a really big difference in whether you think a certain rate is high or low,” said Danielle Hale, Realtor.com’s chief economist.
Here’s a look back at rates through the decades.
The 1970s
Bottom rate: The average rate on a 30-year fixed mortgage was 7.31% in April 1971, when Freddie Mac started surveying lenders. This was close to the low for the decade.
Peak rate: The 70s ended at high of 12.9%
In the early 1970s, surging energy prices amid an oil crisis fueled a new era in American inflation and the economy plunged into a severe recession. Mortgage rates soared as a result. When Paul Volcker took over the Federal Reserve in 1979, consumer inflation was running at an annual pace of about 9%. He pledged to make fighting inflation his top priority, telling lawmakers the Fed would “have to call the shots as we see them.” Volcker raised the Fed’s benchmark interest rate from 11% to a record 20% by late 1980, contributing to higher mortgage rates. Those high interest rates made it so expensive for people and companies to borrow that the economy weakened steadily. Nevertheless, the decade ended with the homeownership rate at 65.4%, about one percentage point higher than at the start of 1970, according to the U.S. Census Bureau.
The 1980s
Peak rate: 18.45% in October 1981
Bottom rate: 9.04% in March 1987, fluctuating between 9% and 11% for the rest of the decade
In late 1980 and early 1981, the Fed once again tightened the money supply, allowing the federal funds rate to approach 20%. Subsequently, long-run interest rates continued to rise. This resulted in mortgage rates reaching an all time-high of 18.45% by 1981. The economy officially entered another recession in the third quarter of 1981 as high interest rates put pressure on sectors of the economy reliant on borrowing, including manufacturing, construction and home buying. U.S. monetary policy eased in 1982, helping lead to a resumption of economic growth. By October 1982, inflation had fallen to 5% and long-term interest rates began to decline. The homeownership rate dropped from 65.5% in 1980 to 63.8% in 1989.
The 1990s
Peak rate: 10.48% in May 1990
Bottom rate: 6.71% in October 1998
The economy was in recession from July 1990 to March 1991, having suffered the savings and loan crisis in 1989 and a spike in gas prices as the result of the Gulf War. After that, the 1990s were characterized by strong economic growth, steady job creation, low inflation, rising productivity, economic boom and a surging stock market. The commercialization of the internet led to the greatest expansion of capital the country had ever witnessed. Mortgage rates, explains Hale, “stabilized around 10%, and then essentially started this long-term declining trend that we’ve seen from 1990 until now, with ups and downs for things that are going on in the economy such as expectations about future growth and the way the Fed is setting overall interest rates.” After sliding in the 1980s, the rate of homeownership increased to 66.9% in 1999 from 64% in 1990.
The 2000s
Peak rate: 8.52% in May 2000
Bottom rate: 4.81% in April 2009
After years of considerable growth, the housing market fell into a deep decline beginning in 2006. A combination of favorable interest rates and relaxed standards for mortgage loans resulted in peak home prices. Home loans were accessible to borrowers who had low credit scores and a higher risk of defaulting on loans. These so-called subprime borrowers were allowed to take out adjustable-rate mortgages, which would start out with low monthly payments that would become much larger after a few years. When house prices peaked, mortgage refinancing and selling homes became a less viable means of settling mortgage debt. Mortgage loss rates began rising for lenders and investors. By the fall of 2008, borrowers were defaulting on subprime mortgages in high numbers, causing turmoil in the financial markets, the collapse of stock prices and the Great Recession. The homeownership rate declined to 67.2% in 2009 from 67.5% in 2000.
The 2010s
Peak rate: The decade started at a high of 5.03%, rates approached that level in 2018 but stopped climbing at 4.87% that November
Bottom rate: 3.35% in November 2012
As the decade began, the market was battling to regain its footing in the wake of one of the largest housing downturns in U.S. history. Foreclosure filings were at a peak of 2.9 million. In an effort to rebuild trust in the financial system, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010 to protect consumers from the unfair and deceptive practices and products that led to the 2008 crisis.
In the vast majority of the country, home value appreciation accounted for most of the growth in the total value of the housing stock. The housing market added $11.3 trillion in value, a little more than a 50% increase in the 2010s. About 14% of that gain was from new housing stock, with the remainder from increased values of the existing stock. The homeownership rate decreased to 65.1% in 2019 from 66.5% in 2010.
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1. Getting Leads from AI AI can help you find and qualify homeowners who may be interested in a second mortgage (home equity loan or HELOC). Common approaches: Predictive Analytics – AI models look at property values, loan-to-value (LTV), credit trends, and household income estimates to flag homeowners who may be equity-rich but cash-flow constrained. Behavioral Targeting – AI scrapes signals from online behavior (searches, social media, property sites) to identify homeowners exploring refinancing, debt consolidation, or home improvement. List Enrichment & Scoring – AI takes raw lead lists (from credit bureaus, title data, etc.) and ranks prospects by likelihood of conversion. Chatbots & Virtual Assistants – Automated lead capture on websites or ads, qualifying borrowers by asking pre-screening questions 24/7. 2. Using AI in the Mortgage Process (Second Mortgages Specifically) Once a lead is captured, AI can help streamline: Prequalification – Instantly running soft credit pulls and property value AVMs (automated valuation models). Risk Assessment – AI models assess borrower income stability, equity position, and repayment ability faster than traditional underwriting. Automated Marketing – Personalized drip campaigns (emails/texts) tailored to where the borrower is in their decision cycle. Compliance Guardrails – AI tools scan communications and ads to make sure they meet RESPA, ECOA, and fair lending rules. ✅ Important Note: Regulations are tightening around AI in lending (bias, transparency, fair lending laws). Any AI-driven lead-gen or underwriting must remain compliant with ECOA, Fair Housing Act, UDAAP, RESPA, and FCRA. Do you want me to map out an AI-driven workflow for generating and closing second mortgage leads (step by step with tools you could use), or do you want a higher-level overview of companies already doing this? You said: Customers are finding thru AI and I am getting them second mortgages thru AI ChatGPT said: Got it — you’re saying customers are finding you through AI (likely through AI-driven search, recommendations, or even chatbots), and then you’re also using AI on your end to help them get second mortgages (home equity loans or HELOCs). Here’s how that usually plays out, and how you can structure it: 🔹 How Customers Find You Through AI Search + Recommendation Engines Borrowers ask tools like ChatGPT, Google Gemini, or even lender chatbots about “best second mortgage lenders.” AI-driven SEO tools route them toward your website or ads. AI-Powered Marketing Predictive ad platforms (Google Ads, Meta, programmatic ads) use AI to match your services with homeowners who are likely equity-rich. Smart drip campaigns + automated SMS/Email nurtures keep them engaged until they’re ready to apply. Conversational AI (Front Door) Website chatbots or virtual assistants pre-qualify by asking: “What’s your home value?”, “What’s your current balance?”, “What’s your income?”. These instantly filter serious borrowers from casual shoppers. 🔹 How You Help Them Get the Loan With AI Lead Intake & Pre-Screening AI pulls in property data (AVM: Zillow/Black Knight/CoreLogic) + soft credit pulls. Instantly calculates Loan-to-Value (LTV) and debt-to-income (DTI). Automated Prequalification If borrower has enough equity + meets credit standards → AI engine generates a prequalification in minutes. AI Underwriting Support OCR (document reading AI) extracts paystubs, W2s, bank statements → fills in 1003 automatically. AI models flag potential risk (income inconsistencies, high utilization). Personalized Loan Matching AI matches the borrower to the best second mortgage product (fixed-rate 2nd lien, HELOC, blended loan). Could even run “what-if” payment scenarios instantly for the customer. Automated Compliance & Closing AI scans communications to avoid UDAAP/ECOA violations. Auto-generates disclosure packages and checks for missing signatures. 🔹 Big Picture You’re essentially creating an AI-driven pipeline: Customer → AI finds you → AI captures lead → AI helps you qualify → AI supports underwriting → You close the 2nd mortgage faster. This model is gaining traction because borrowers want instant answers, and AI cuts weeks off the traditional process. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Great question. Markets don’t usually wait until the Fed actually cuts rates to react — they move in advance, based on expectations. Here’s how it works: Forward-looking nature of markets – Bond yields, stock prices, and mortgage rates are influenced by what investors think will happen, not just what has already happened. If traders believe the Fed will cut rates in September, they start pricing that in now. Fed communication – The Fed often signals its intentions ahead of time through speeches and policy statements. If Chair Powell or other Fed officials strongly hint at a cut, the market will react immediately. Data-dependent – If new data (like inflation cooling or unemployment rising) supports the case for a cut, markets may rally or yields may drop months before the Fed makes the move. The actual cut – When September arrives, if the Fed cuts exactly as expected, the market reaction may be small (because it’s already “priced in”). But if the cut is bigger, smaller, or delayed compared to expectations, that’s when you see sharper moves. 👉 So to your point: yes, the market already reacts now to a possible September cut. By the time the Fed announces it, most of the impact could be baked in. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
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