Long-Term Mortgage Rate Trends

When you are buying a home, or even considering buying one within the next few years, you must consider the long-term mortgage rate trends.

In the event you are not ready to buy at the present time, but anticipate buying a home at some point in the next few years, you can look at the rate trends to try to determine the best time to buy, by trying to guess which way the interest rates will go. It’s obviously the best time to buy when interest rates are at their lowest.

If you are ready to buy now, and don’t want to wait, you will also want to look at long-term trends, to determine whether a fixed or adjustable rate mortgage would be best for you. In this situation, if interest rates are at a historical low, a fixed rate mortgage would be best, since it would lock in a low rate, and you would be protected against the inevitable rise in the future.

If the economic indicators are telling you that interest rates may go down in the future, an adjustable rate mortgage would be best for you, since you would be able to take advantage of the lower rates in the future.

Current mortgage rates are now at a historic low point. Don’t make the mistake of assuming that these rates will last forever, though. A look at historical data will show that current mortgage rates do fluctuate, and often by a large amount.

While in November, 2004, the index rate was 5.64 percent, in 2002, rates were in the 6 percent rage, in 2001 in the 7 percent range, and in 2000 they were in the 8 percent range. Going back even further, we see double-digits in the 1980s, with a high of 15.8 percent in November 1981, nearly three times the rate it is today.