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Mortgage rates have seen their fair share of ebbs and flows over the years, making the journey of homeownership a thrilling one that often starts with a pivotal decision: securing a mortgage. In this guide, we’ll set sail through the seas of history, comparing the current housing mortgage rates to their predecessors.


The 1980s: The Age of High Tides

Ah, the 1980s – an era defined by neon lights, cassette tapes, and double-digit mortgage rates. Believe it or not, there was a time when homebuyers faced staggering interest rates, often exceeding 16%. In fact, I clearly remember my mother’s home mortgage being 18% during that time. While these rates may seem astronomical today, they were par for the course back then. Obviously, home prices aren’t what they are today. “Creative financing” was an oft-used term during the 80s.

The 2000s: The Calm Before the Storm

As we sailed into the new millennium, mortgage rates began to taper. The early 2000s saw rates hovering around the 6% mark, providing a reprieve for prospective homeowners. This period marked a relatively stable phase in mortgage history, offering a glimpse of what would soon become a tempestuous era.

The early 2000s was an unprecedented period in our local market. It was the start of a period of multiple offers, seven day escrows and a new term to real estate: flipping. The home prices were escalating so quickly that investors and newcomers as well could buy a house, make some quick repairs and sell it in the same market making a sweet profit.

The 2008 Financial Crisis: A Perfect Storm

The global financial crisis of 2008 cast a long shadow over the housing market. Interest rates plummeted in response to economic turbulence, reaching historic lows. Mortgage rates dipped below 4%, ushering in a surge of refinancing and new purchases. Suddenly, homeowners and buyers were met with unprecedented opportunities.

It was the birth of predatory lending.

What once was reserved for the expert investor to use as a financing tool, was implemented for the novice: stated loans. The buyer literally “stated” their income. There were no checks and balances. The lenders accepted that and funded the loans. There were many other options as well. Home buyers were told to simply refinance the loan into something more traditional once they accrued enough equity.

The perfect storm started spinning out of control when homeowners used that equity like an ATM. They withdrew money to buy cars, boats, and to go on expensive vacations. Things they couldn’t afford otherwise. Houses stopped gaining record-breaking equity. Lending restrictions tightened. The job market slowed.

Then when a real emergency came up they had no equity to pull funds from. Health emergencies or a loss of job ruined families. Housing inventory grew dramatically. People were trying to unload their houses. There were over a hundred houses for sale in Pacifica.

The unfortunate reality was that the mortgage conditions changed making those historically low mortgage rates useless.
Homeowners couldn’t refinance without a job. Housing values plummeted.
When the houses didn’t sell another new term came into real estate: loan modification.

Let’s Wait Until the Mortgage Rates Come Down

Home buyers often take the “wait and see” approach which can destroy any chance they had at buying a home until the next real estate cycle comes around. They’ll wait to see if the rates or housing prices decrease.

Mortgage rates may come down. However, lending restrictions may increase. So when those rates were at 4%, the necessary credit score to obtain a mortgage grew. The amount of the downpayment requirement increased. As a buyer, you have to jump when you’re ready. We only down when we’ve hit the bottom when we’re looking back after the change has already occurred.


2022: A New Horizon

Fast forward to 2022, and we found ourselves in a landscape of mortgage rates that, while higher than the historic lows of the mid-2010s, remained relatively favorable. As of January 2022, rates were in the low-to-mid 3% range for a 30-year fixed-rate mortgage. This, compared to the past, is still remarkable.

The increased mortgage rates of 2023 have had a discernible impact on the housing market. As rates inched up from the previous year, potential homebuyers faced higher borrowing costs. This has led to a moderation in demand, particularly among first-time buyers and those with tighter budgets. This is where the wait and see approach has eliminated many buyers from the housing market altogether. A small increase in rates combined with the outrageous housing prices of San Mateo County has forced those considering a home purchase to take a back seat while the current cycle processes.

Additionally, any homeowners who had been considering refinancing have chosen to hold off in light of the elevated interest rates. At this point those who purchased under the remarkably low rates are holding steady. They won’t be moving any time soon. Those historically low mortgage rates are what allowed them to purchase a house in exorbitantly priced markets.

However, it’s worth noting that despite this uptick, mortgage rates in 2023 still remain favorable, to those of us who remember the significantly higher rates experienced in past decades. As a result, while the market has experienced a shift, it has not seen a dramatic slowdown. It is still considered a sellers’ market. Although the strength of the sellers has diminished, real estate activity continues at an adjusted pace.

The Impact of the Federal Reserve on Mortgage Rates

The Federal Reserve, as the captain of economic policy, plays a significant role in dictating these rates. Their decisions, based on economic indicators and projections, have a direct impact on the interest rates available to borrowers. If you’re getting into the housing market, it’s worth keeping an eye on their announcements and policy shifts. They can signal changes in mortgage rates.


Affordability and Opportunity

While the current rates may not mirror the historic lows of the post-2008 era, they are still favorable for some. Buyers today have an opportunity to lock in rates that are, historically speaking, incredibly competitive. The problem of Bay Area housing prices remains the giant swell to overcome.

Considerations for the Future

As we sail forward, it’s wise to view with a long-term perspective. While current rates are attractive for home buyers in some areas, we do expect that mortgage rates will decline in 2024. The question is: What will the job market, loan conditions, and economy hold for those buyers?

Weathering the Storm: A Closing Note

The journey of homeownership is a voyage filled with excitement and challenges. Understanding the historical context of mortgage rates provides valuable insight. By staying informed and working with trusted advisors, you can navigate these waters with more confidence.

In conclusion, the current housing mortgage rates, while not at historic lows, still offer favorable opportunities for some prospective homeowners. As we navigate the waves of the real estate market, let’s set our course with knowledge, preparation, and a spirit of adventure. Happy home hunting!

The above real estate information, Navigating the Waves: Housing Mortgage Rates in Perspective, was provided by me, Vicki Moore, a realtor specializing in home sales from Pacifica to Pescadero, including greater San Mateo County. 

Are you thinking of making a move? I have a passion for real estate. I service real estate purchases and sales in most San Mateo County cities and towns. Let’s talk about your future real estate goals today!

I can be reached via email at or by phone at 650-888-9268. I have helped people move in and out of many San Mateo County homes for the last 25 years.

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