by Starla Ross

Created on: August 24, 2008   Last Updated: March 22, 2012

Changes in the housing and mortgage industry in recent years have left many homeowners hesitant to sell or purchase new homes.

In an effort to reverse the problem with sub-prime mortgages, there is no doubt banks and other lending institutions have tightened mortgage guidelines. However, new mortgages and mortgage refinances are still available, especially for applicants with average to above-average payment and credit histories.

Even though house values have declined in some metropolitan areas, mortgage rates have remained relatively stable over the past couple of years.

According to HSH Associates, an independent financial publisher that monitors and tracks the history of consumer loans, mortgage rates have not changed significantly during the last five years. The average rate for a 30-year fixed mortgage rate in January 2008 was 6.25% annual percentage rate (APR), down from the average 6.33% in January 2007.

Rates have remained stable for several years. Five years ago in January 2003, a 30-year fixed mortgage cost a homeowner only 6.05% APR.

When considering the mortgage rates of years past, mortgages today look like a real bargain. Only 15 years ago in January 1993, the average rate for a 30-year fixed mortgage was 8.12% and 20 years ago in January 1988, 10.55%. Even those rates seem low though when considering the average interest rate for a 30-year fixed mortgage in January 1983 came in at a whopping 13.40%.

The mortgage as we know it today is a relatively modern document. While there were land conveyances and other agreements based upon a simple hand-shake since the birth of the United States, the mortgage of today became more widely used in 1934 when the Federal Housing Administration (FHA) was created.

At the end of the Great Depression, the housing market was essentially in shambles. Millions of people had lost their jobs, and mortgages were difficult to obtain. Mortgages that were available were only issued for 50 percent of a property's value, and the remaining 50 percent was due by balloon payment within three to five years. With these kinds of terms, the average family could not afford to purchase a home. Only four in ten families owned a home, compared to the over seven families in ten that own homes today.

With the inception of the FHA, government-backed mortgages were made available with limitations on the amount that could be borrowed, sparking an increase in home ownership.

Today, the FHA is the only U.S. governmental agency that is self-funded. That means it costs the taxpayers nothing to operate because it generates all of its own income. Mortgage insurance paid by homeowners pays the expense of running the everyday operations of the FHA.

A mortgage today is the pretty much the same as its 70-year-old counterpart, with the exception that there are more rules and regulations to protect the different parties involved (the buyer, seller, and creditor).

Fluctuations in the housing market are normal over time. Adjustments in housing prices and mortgage rates will continue to change as the housing market makes an attempt at correction.

One fact still remains however. Mortgage rates are at one of the lowest points in modern history, and owning a home is still considered to be one of the best investments the average American family can make.

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