This graph can help you see if you're getting a good interest rate on a mortgage, historically speaking (2024)

There has been much discussion about a slowing housing market in recent months. Rising interest rates —coupled with high home prices and lower consumer confidence amid a looming recession —have made potential homeowners second guess that next big purchase.

While these are all valid factors, consumers worrying about high interest rates may benefit from putting their rate into larger context. Rates have certainly increased from the pandemic days over the last two years, but historically, they're still relatively low. Mortgage rates have been as high as 18% in the 1980s, which is significantly higher than current rates.

Just take a look at this graph from the St. Louis Federal Reserve to see how today's mortgage rates measure up against the ones in the past. The graph shows the popular 30-year fixed-ratemortgage from 1971 to present day, identifying when there was also a recession, which generally correlates with rate spikes.

Given the recent second quarter GDP, or Gross Domestic Product, data suggesting a technical "recession," it will be interesting to see how mortgage rates react. We can look at this graph as the weeks unfold to see how the rates change and compare them to other periods of recessions from years before. For example, the 2008 recession saw a 30-year mortgage peak of 6.63%. The current 30-year rate, as of this writing, is at 5.30% but we'll see how recession fears impact this.

While the best mortgage rate is really the lowest one you can get, you're able to have greater context as to how low or high your rate ranks when looking at the graph from the St. Louis Federal Reserve.

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Much of your mortgage rate will depend on personal factors such as where you live,your credit scoreandhow much you expect to put as a down payment, plus the mortgage type, term and amount. That said, some mortgage lenders are known for helping homebuyers get as low a rate as possible.

For example, SoFi offers a 0.25% discount when you lock in a 30-year rate for a conventional loan, while another special gives customers up to $9,500 in cash back when they purchase a home through the SoFi Real Estate Center, which is powered by HomeStory. SoFi members can also get $500 off on their mortgage loans.

Working with a lender that offers shorter loan terms, such as 15-year loans, can also help you score a lower rate since these are typically based on your level of risk. If you pay off your loan faster —which usually requires a higher monthly principal payment since the term is shortened — you can be rewarded with a lower interest rate because your decreasing balance shows you're less of a risk when it comes to defaulting on your loan.

Rocket Mortgage offers loan repayment terms as low as eight years. Keep in mind, however, that applying for a mortgage with a low credit score, which Rocket Mortgage allows, most likely means you'll get an interest rate on the higher end of the lender's APR range no matter what loan term you choose.

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