It’s been quite the ride for mortgage rates the past few years. Here is a brief summary:
- In 2021: In January of 2021 the average 30 year mortgage rate was 2.5%. The year ended with the 30 year rate around 3.25%. As we know, this was the lowest mortgage rates had been in the history of keeping track of rates. It was an unprecedented time for rates. The low rates from March of 2020 and all of 2021 caused the largest refinance boom ever seen and more home sales than ever seen. It also caused massive inflation of home values.
- In 2022: January of 2022 saw rates between 3.5% and 4.0%. Rates slowly climbed throughout the year and ended with a 30 year rate around 6.25%. This obviously slowed down the housing market. Refinancing completely stalled as most people that wanted to refinance did so when rates were so low in 2020 and 2021. The purchase market slowed since higher rates pushed monthly payments up to be less affordable.
- In 2023: January of 2022 saw rates hold around 6.25%. However, by June rates rose quickly to 7.0%. In October we saw the highest rates in decades when the 30 year fixed rate went over 8.0%. But by late 2023 the rate went back down to average around 7.0%. It was a very volatile year.
- In 2024: January of 2024 saw the 30 year rate continue to fall to around 6.50%. In the spring the rate went back up to around 7.0%. However, over the summer we saw a bit of hope when in August the 30 year rate dropped down to 5.75%! Wahoo! It was short lived unfortunately, as rates slowly climbed up again to where by December 2024 the average 30 year rate was 6.75%.
Right now, in early 2025, mortgage rates are still hovering around 6.75%. Predictions of what rates will do in 2025 are mixed. It all depends on inflation in general. If we see inflation ease up, then the Federal Reserve will be more apt to lower their benchmark rate and mortgage rates will also come down. But if inflation remains stubbornly high then we will see mortgage rates stay around 7.0% or even go higher. Fingers crossed for LOW INFLATION!
