Mark R.D. Jones

Historical Housing Loan Interest Rates in the United States

(updated from time to time)

U.S. Mortgage rates for housing since 2009 have been at once-in-a-lifetime lows. Further below are graphs and charts of the history of interest rates or housing price indexes in the U.S. (and one international chart) indicating trendlines for:
   • Interest rates for 30-year fixed-rate loans since the mid-1970s
   • U.S. Interest rates for both 30-year and 15-year fixed rate loans from 2005 through 2011
   • Median and average prices of new houses in the U.S. since 1963
   • Comparative real housing price indexes in 15 developed countries from 1970 to 2008
   • U.S. house mortgage interest rates on 30-year loans since 1900
   • The Standard & Poor’s Case-Schiller 10- and 20-City Composite Housing Price Indexes from 1987 through 2011

The present low interest rates in the U.S. are in part a consequence of the U.S. Federal Reserve Bank actions in response to the now five-year old economic and financial crisis. It is a crisis most visible in housing and mortgage loans, following the conclusion of the biggest housing price run-up in United States history. By 2005, sales volume of new houses was declining on year-over-year basis, and sales of existing housing had similar declines, and prices had been softening for new housing in many metropolitan cities in the U.S.

By the end of 2006, the economy already was shrinking by at least one important measure, total income. The Federal Reserve Bank Board of Governors failed to consider the potential consequences of the changes in the housing and financial markets, as of 2006, and at that point was still worried about inflation. Even as the crisis neared in early August 2007, meeting transcripts of Federal Reserve Bank leadership meetings show that they remained skeptical that the housing financial and foreclosure crisis could affect the rest of the financial system, and had a fundamental misunderstanding about the tremendous growth and leverage that mortgage-backed derivatives would have in magnifying the financial consequences of an economic slowdown or downturn.

A sample list of contemporaneous mass media articles:
   • Big Builder Sees Slower Home Sales. Vikas Bajaj & David Leonhardt. New York Times (November 9, 2005).
   • The Heroes of Housing Just Say No. David Leonhardt. The New York Times (August 9, 2006).
   • Incentive Time In a Buyer’s Market; Sweetening the Deal to Sell a Home. – By Vika Bajaj and David Leonhardt (August 25, 2006).
   • What Statistics on Home Sales Aren’t Saying. David Leonhardt. The New York Times (December 6, 2006).

Ben Bernanke in 2005 and 2006 was the most consistent voice within the Federal Reserve Bank warning that the housing market’s difficulties could have broader consequences. The crisis was apparent by some measures in 2005 with rising inventories of unsold new housing; with the conclusion to the rise in housing prices associated with the U.S. housing price bubble ended with increasing unsold inventory of new houses in 2006; by 2007 the drop in the average price of new houses was the first in the U.S. since the Great Depression of the 1930s.

The U.S. was merely one of many developed countries that experienced a rapid rise in housing prices in the last two decades, and the U.S. rise was less than half a dozen other countries. See the international housing price-index graph further below. The U.S. crisis was aided and abetted by a U.S. financial industry that is collectively incapable of honestly describing the health of the economy and the companies, and financial products it promotes, as Mike Mayo describes in his book “Exile on Wall Street”; see an excerpt in the Wall Street Journal article “Why Wall Street can’t Handle the Truth“. See also: Federal Reserve Bank of St. Louis timeline of the financial crisis. The California venture capital firm Sequoia Capital gave an excellant analysis and presentation to its own portfolio of companies describing the credit-driven environment leading to the financial crisis, a few weeks after Lehman Brothers became insolvent and filed for bankruptcy (September 15, 2008). The Sequoia Capital presentation issued on October 9, 2008, and is entitled “Rest in Peace, the Good Times“. The presentation was an advisory to all startup companies that equity capital was going to become much more difficult to obtain for the foreseeable future.[1]

In 2011 and onward, individuals in a financial position to borrow and purchase housing, are in most parts of the U.S. able do so at remarkably affordable costs, especially at the lower-price spectrum of the housing market, for housing in the $100,000 to $250,000 dollar range, with significantly reduced prices compared to 2006, combined with astonishingly low mortgage interest rates. During 2009 and 2010, U.S. housing prices fell to 2003 levels, on an average and median price aggregate, according to the S&P/Case-Schiller Home Price Index.

It is likely it will take more than five years from 2011 for housing released to the market following mortgage foreclosure to be absorbed. Laurie Goodman of Amherst Securities Group, estimated that of approximately 55 million mortgages outstanding in 2011, 10 million mortgages were likely to go into default, thus continuing to depress housing prices as those newly-foreclosed houses are sold into the market. Goodman’s testimony to a subcommittee of the Senate Committee on Banking, Housing and Urban Affairs U.S. Senate on September 20, 2011, is entitled “New Ideas to Address the Glut of Foreclosed Properties“.

The U.S. Federal Reserve Bank on September 21, 2011 announced a nine-month plan to purchase 400 billion dollars of longer-term U.S. treasury bonds and sell short-term treasury debt, to push down long-term interest rates; this in turn depresses interest rates in the U.S. mortgage markets for the duration of that particular Federal Reserve effort. On September 13, 2012, the Fed announced another program to buy mortgage-backed securities, in an effort to put more money into the financial system, and depress long-term interest rates. See: Fed Announces New Round of Bond Buying to Spur Growth by Binyamin Appelbaum, New York Times (Sept. 13, 2012).

Here are graphs of the history of U.S. interest rates for 30-year fixed rate loans since the mid-1970s, and recent interest rates for both 30-year and 15-year fixed rate loans through 2011.

Data compiled by

Graph of data from the U.S. Census showing national average and median price trends of new houses

Real House prices, North America, Western Europe, Japan and Australia, 1970 - 2008  (1970=100)

Real House prices, North America, Western Europe, Japan and Australia, 1970 - 2008 (1970=100) From: 'Examining the big lie: How the facts of the economic crisis stack up' by Barry Ritholtz. Washington Post, November 19, 2011


Graph of U.S. Mortgage Interest Rates since 1900

U.S. Mortgage Interest Rates since 1900. By Steve Sjuggerud. 'Daily Wealth'

alternative text here

S&P Case-Schiller Housing Price Indexes 1987-2011 (via Barry Ritholtz / The Big Picture -

(This post is expanded and updated from time to time)


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