How Mortgage Interest Rates Have Changed (or not Changed) over Time

What the Last 40 Years of Data Indicates

The majority of Americans want to be homeowners. In fact, 87% of respondents to a survey conducted by Fannie Mae in 2023 describe homeownership as an important factor in “the good life”¹.

Unfortunately, while the desire for homeownership remains strong, many people believe that buying a home is hard in today’s economy.

According to Gallup polls in 2024, just 21% of Americans believed it was a good time to buy a home due to perceived high costs and interest rates. This was the lowest percentage since Gallup began tracking this data, down from a peak of 81% in 2003.²

Are they right, though, and is this the worst time to buy a home? The data tells a surprising story.

High Rates and Soaring Prices are Causing Headaches for Buyers -- but are Things as Bad as They Seem?

It's not surprising that homeownership feels out of reach.

The median home price hit $416,900 in Q4 of 2025, up from $329,000 in April of 2020.³ Mortgage rates also average 6.85% as of the week ending June 5, 2025 compared with 3.81% the week ending June 4, 2020.⁴

However, while this feels like the worst housing market in history for borrowers used to sub-4% rates that became the norm following the 2008 financial crisis,⁴ the reality is that today's rates may be more of a reversion to historical norms.

In other words, the 6% and higher rates of today may not be the historical anomaly -- but instead, the sub-4% rates that homeowners enjoyed for so long are.

This is both bad news and good news. It suggests rates may not drop to the levels so many recent home buyers locked into -- but it also demonstrates that high rates don't make homeownership impossible. Property owners consistently faced far higher rates in the past and still managed to make the American Dream of homeownership happen.

Let's take a look at how homeownership costs have changed over time, as well as what the cost of owning a home looks like today, to get a better understanding of how the housing market has evolved and what buyers can expect going forward.

Homeowners Have Enjoyed Unprecedentedly Low Rates in the Pre-Pandemic Era

Since the 2008 financial crisis and the resulting Federal Reserve stimulus efforts, homeowners have enjoyed unprecedented opportunities to secure a mortgage at an extremely low rate. Today, more than 6 in 10 mortgages held have rates below 4.00%.⁵

The pandemic stimulus during the COVID-19 pandemic brought further opportunities for owners to refinance and buyers to secure highly affordable home loans. Freddie Mac estimates that borrowers who were able to lock in at historically low rates during the peak of the pandemic generated an estimated $66,000 in average savings relative to current rates.⁵

However, both the 2008 crisis and the pandemic were black swan events -- and the period of ultralow mortgage rates that resulted is also a deviation from historic norms. In fact, as the table below shows, the period from 2009 to 2022 was the first in which rates remained around 5.00% or below for any sustained period of time.⁵

Table created by author. Table source: Freddie Mac. "Primary Mortgage Market Survey".

Although you may have heard that Baby Boomers had it easy, the actual data shows the reverse is true.

Those purchasing homes in the 1980s, when many Boomers were in their prime home-buying years, faced the greatest challenges as mortgage rates topped 16%, home prices surged more than 60% in a four-year period of time, and the average monthly payment on a home loan increased 34% year-over-year.⁶

To better understand how mortgage rates and home prices have impacted costs, let's take a look at homeownership costs through the years.

Homeownership Costs Through the Years

Home prices have increased in value, and not just because of inflation.

The first chart shows the median weekly home prices throughout the years, while the second shows the inflation-adjusted median cost of a home calculated in January of each year. The numbers for the second chart were derived from median home price data from the Federal Reserve along with the Bureau of Labor Statistics CPI Inflation Calculator.

Table calculations: Author. Table sources: Federal Reserve Bank of St. Louis and Bureau of Labor Statistics CPI Calculator.

As the data shows, a sharp increase in median home prices did occur in the post-pandemic era, but on an inflation-adjusted basis, the increase is not that out of line with previous price surges that are a natural part of the cyclical real estate market.

The Cost of Homeownership: From 1980 to Today

Home prices and mortgage rates go hand-in-hand in determining how much homeownership costs.

So, let's take a look at what purchasing the median-priced property, at the average mortgage rate, would have cost you between 1980 and today, assuming you make a 20% down payment and obtain a 30-year fixed-rate mortgage in January of each year.

Table created by author using Freddie Mac and Federal Reserve Data, and Fannie Mae Mortgage Calculator.

Payments undoubtedly look high compared with those in recent years -- but are much more in line with the cost of homeownership in the past.

The reality is, homeownership has still proved to be a stellar investment for those who purchased even during expensive times, with Baby Boomers sitting on an estimated $17 trillion in home equity as of 2024.⁷

It's also worth remembering that the rate at which you purchase a home is not the rate you will need to pay for the life of the loan. Borrowers can, and do, refinance as rates fall. However, once you become a homeowner, you benefit from rising property values and begin building equity that helps to increase your net worth over time.

Find an Affordable Mortgage for your Home Purchase

If you are sitting on the sidelines hoping that mortgage rates will fall, the historical data provides limited reason for optimism. Rates will ebb and flow, but a return to the sub-4.00% rate range is far from a guarantee.

Rather than delaying your purchase and losing out on the potential appreciation that benefits property owners, it’s worth exploring what homeownership options are affordable to you today.

Freedom Mortgage can provide you with information about borrowing options, so you can understand what homes are within your price range and explore your local market to find a property that's right for you and your budget.

Remember, you can always refinance, but you cannot go back in time and purchase a home before prices rise. If you are in a good financial position to make a purchase, contact Freedom Mortgage today to see if you can get prequalified for a mortgage.

Sources and Methodology

1. Fannie Mae. "Consumers’ Homeownership Aspirations Remain High Despite Higher Home Prices and Interest Rates." June 6, 2023.
2. Gallup. "Americans Expect Home Prices to Rise, See Market as Poor." May 9, 2024.
3. Federal Reserve Bank of St. Louis. “Median Sales Price of Houses Sold for the United States.”
4. Freddie Mac. "Primary Mortgage Market Survey."
5. Freddie Mac. "Economic, Housing and Mortgage Market Outlook – May 2024 | Spotlight: Rate Dispersion by Generation." May 16, 2024.
6. Realtor.com "No, Boomers Didn’t Have It Easier Than Millennials When Buying Their First Homes." June 16, 2024.
7. HousingWire. "The ‘silver tsunami’ wealth transfer will mostly stay in the family." January 7, 2025.