by Ken Reetz

Created on: August 24, 2008   Last Updated: February 03, 2012

Mortgage interest rates have remained relatively stable over the past fifteen to twenty years. In fact, the average rate is less today than it was nineteen years ago; in 1993 the best mortgage interest rate was 7.24% -  in 2012 you can easily figure on a rate near 4%.

If you compare those interest rates on the same $160,000 mortgage, the basic payment today is about $300 per month less than it would have been in 1993.  It could also be argued that the drop in home values in today's market has also evened out the type of home that could be purchased for that same $160,000. 

These figures are based upon a 30 year fixed rate mortgage; remember they are averages and do not reflect the lowest or the highest rates. This is according to HSH Associates, the nation's largest publisher of mortgage information. 

The big jump for home mortgages took place after 1934 when the Federal Housing Administration (FHA) was created;  insuring lenders against potential losses if the borrower could not repay the loan. There was only 40% home ownership at that time, making America primarily a nation of renters.

By 2001 over 68% of Americans were considered home owners, but that figure has now dropped to 66% in year 2012 accordingly to the US Census Bureau.  A slight decline, but still much higher than in the 1930'3 when mortgage interest rates were at 7%. 

How much longer the 4% mortgage rate will be available is open for discussion; Federal Reserve Chairman Ben S. Bernanke suggests that we have another year or two - until 2014.  One thing is certain, however, and that is how fast things change in this crazy world of ours.  For now at least, many who are planning their future can continue to enjoy  the idea that "The American Dream" of home ownership is still something within reach.    

References:
HSH Associates historical interest rate data: http://www.hsh.com/mtghst.html
The History of Mortgage Interest: http://www.taxfoundation.org/blog/show/1382.html
FHA information: http://www.hud.gov/offices/hsg/fhahistory.cfm

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