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Current (summer 2008) US mortgage rates remain far lower than rates at almost any time during the past 35 years.

The Federal Home Loan Mortgage Corporation (Freddie Mac) publishes tables of mortgage rates since 1971 (http://www.freddiemac.com/pmm s/pmms30.htm).

From a low of 7.3% in 1971, average 30-year fixed rates rose to 10.0% in 1974 and remained around 9.0% until late 1978. This basic rate then climbed steadily to an astounding high of 18.45% in October 1981 and did not fall below 10.0% again until April 1987.

Twenty years ago, in 1988, average 30-year fixed rates ranged from 10.0% to 10.7%. Even the one-year adjustable (ARM) rate, ranging from 7.5% to 8.5%, was much higher than the 30-year rate of today.

During the 1990s, the 30-year rate fell below 7.0% for only 2 months in 1993, 6 months in 1998 and 3 months in early 1999. The high mark of 10.48% occurred in May of 1990 while the low was 6.71% in October 1998.

The lowest annual average 30-year rate (6.94%) of the 1990s, which occurred in 1998, was almost one full percentage point higher than 6.05% average rate through July of 2008.

During the 2000s, the 30-year rate has ranged from a high of 8.71% in January 2000 to a low of 5.23% in June of 2003. Average annual rates were 5.83% in 2003, 5.84% in 2004 and 5,87% in 2005.

For 2007, the average annual rate of 6.34% was only about one-half of one percentage point more than the average rate during the 2003 -2005 period. For a $200,000 mortgage, the additional monthly interest is a relatively small $80, before considering the mortgage interest deduction on Federal taxes. However, compared to ten years earlier (1997), when the average rate was 7.6%, the 2007 rate saved about $200 in monthly interest, before the tax deduction.

As of July 2008, the average 30-year rate of 6.43% is just about the same as the average rate for 2007. Considering the significant price reductions during the past 2 or 3 years, overall affordability remains very high.

Modern mortgages took form only after the 1930s depression. Detailed explanation of the history of US mortgages is provided in a paper by Richard K Green and Susan M Wachter for the American Economic Association (http://repository.upenn.edu/c gi/viewcontent.cgi?article=100 0&context=penniur_papers).

Learn more about this author, John F Mann.
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