Mortgage Rate History

Just about every day I hear on the news or read an article about the federal government raising the mortgage rates in an effort to slow down inflation. Then I started thinking about my personal experience going back to 1978.

I started looking to purchase my first home when the interest rates were starting to climb. It became quite a concern because as they continued to decrease my purchasing power . It was strange to think back as I thought I was lucky to get a rate of 10%. Shortly there after, the mortgage rates shot up to 18%. My thoughts of staying in my “starter” home for a short period of time became out of reach. To think of buying my second home at the high rates was well beyond my means.

It was not until 1987, when the interest rates were back down to 10% did I feel another home was within my reach. The upside was over those 9 years the selling of my first home was 3.5 times what I paid for it. However, that also translated to most homes increasing at the same rate.

Funny, how people love to have “bragging rights” when they buy a house to only sell it for a lot more money. What they fail to admit is the value of their home increased only because of inflation. Yet, when gas or food prices go up, they get upset and want the government to step in to help reduced inflation.

The United States economy is driven by two major factors - home and auto sales. The relevant products and services with both homes and autos are totally dependent. The word is the feds are finding the recent rise of interest rates has not slowed down inflation as much as they would like, which tells me they will continue to raise it because they don’t know what else to do. The scary thing is credit cards are the tool that a majority of families use to make a purchase. The average interest charged on unpaid credit balances is at 19%! This is going to strangle most families as they will never be able to get out debt at those rates. In years past, the interest you paid on credit cards, car, and personal loans was deductible. This is no longer the case.

In other words, the only interest you can deduct is mortgage interest… if you’re lucky enough to own a home. Funny how the tax laws seem to favor those most fortunate.