Mortgage rates plummet more than a tenth of a percent!

After skyrocketing two weeks — and causing various levels of hand-wringing and "what does this mean for the market" stories — mortgage rates plummeted last week, according to Freddie Mac (about 0.14 percent).

An average 30-year, fixed-rate mortgage goes for 4.37 percent (with 0.7 point); last week it was a whopping 4.51 percent. The week before that it was at 4.29 percent.

Perspective. The talk is about this recent upward trend:

But the scale of that graph is from 0 to 5%. Let’s make it a bit more realistic and use the most recent high point — about 18% in 1981:

Yep, all that waily, waily, waily is about a couple of little bumps. Want more perspective? Here’s the graph of mortgage rates going back to 1900:

Mortgage rates 1900-2013

Suddenly those 0.1 percent changes don’t seem so headline-worthy, do they?

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
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3 Responses to Mortgage rates plummet more than a tenth of a percent!

  1. Keith D says:

    A 1% change in mortgage rates from 4 to 5% with a 20% downpayment results in 8.8% less purchasing power. That has a major impact on the market. Sure, rates are awesome right now, and no one denies that. But for people who have been waiting for the “right time”, they may well find homes they want now out of their reach. Just because rates are 1,300 b.p.’s lower than in 1981, it doesn’t mean rate increases don’t matter.

  2. Oh, they certainly matter — my point is that weekly changes of a tenth of a percent aren’t newsworthy. There’s a longer-term, bigger picture here. (Now, if rates went up a full percent in a week, that’s newsworthy!)

  3. Thanks for this interesting insight into american Real estate and how the market is affected by the interest rates. Unfortunately, foreigners are not allowed to loan money to buy our properties but in general we see similar changes happening

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