General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsSo mortgage interest rates are 5% now?????
When my wife and I were looking to buy our first house, Reagan was president.
The mortgage rate was 16%.
spooky3
(34,476 posts)Kaleva
(36,342 posts)JohnSJ
(92,394 posts)Kaleva
(36,342 posts)JohnSJ
(92,394 posts)Kaleva
(36,342 posts)JohnSJ
(92,394 posts)He then started hiking interest rates under Carter to around 17%
They went even higher under reagan
I am pretty sure that was the scenario
My first interest rate for a house was 9 and 7/8 % before Volker started increasing interest rates to unreal levels
1978
JohnSJ
(92,394 posts)started cranking up interest rates to curb run away inflation during Carter
The low Interest rates were due to the republican financial implosion under bush W, and republican deregulation of the financial industry with risky and predatory loans and other risky maneuvering
The pandemic hit, and that is why the low interest rates continued
Irish_Dem
(47,382 posts)Mortgage rates were too high so people resorted to this.
Johnny2X2X
(19,114 posts)We bought a house and got a 6.8% interest rate and all of our friends and family were jealous.
5% interest rate on a home is still fantastic. We've got 3.25% on our current home and it is awesome, we were able to refinance for 3.25 when the value was high enough that we could eliminate PMI altogether. My mortgage payment is less than half of what rents are right now for similar homes.
PoliticAverse
(26,366 posts)FoxNewsSucks
(10,435 posts)Amishman
(5,559 posts)So while interest rates are much lower, house prices have soared. This has been a huge benefit to those who bought in the 80s, and very harmful to those buying now.
Why so harmful to those buying now? Harder entry for first time buyers.
Low house prices but high interest rates meant that 20% down for a conventional mortgage was a lot lower bar. While buyers now might have some offset with paying more principal vs interest, the higher house price means the amount of down payment money needed is far higher relative to the resulting monthly payment.
And many buyers are back over 5% now. I work in finance, and the lender rate sheet I have handy a 700 credit score, 20% down, and no points would be at 6.625%. Paying 2 points puts you still at 6.125%
brush
(53,843 posts)Next time the war of generations breaks out on DU, cite this statistic.
Novara
(5,851 posts)I am paying less per month and my mortgage gets paid off 10 years quicker.
gab13by13
(21,402 posts)JohnSJ
(92,394 posts)GoCubsGo
(32,088 posts)I was getting WAAAAAAAAAAAAAYYYYYY more than the 0.2% interest on my savings account than I'm getting now. If you invested in a CD, you were getting well over 7% during much of that time. Having to pay a little more to borrow will suck, but it's nice that investments on savings will be more worthwhile now. It's not like the 1980s, but it's a start.
SomewhereInTheMiddle
(285 posts)I hate high loan rates, but actually being able to make money by saving is not a bad thing. It is too bad the two things are interconnected.
progree
(10,918 posts)(the contract for deed had a 3 year balloon which scared me to death, but managed to pay it off in 3 years). That's all after putting about 25% down. Anyway, quite a deal. The prevailing mortgage interest rate then was about 15%.
DenaliDemocrat
(1,476 posts)CDs gave a 6% return. We are actually returning to a little more normal economy
Stinky The Clown
(67,818 posts)Chautauquas
(4,452 posts)I bought a house and got an interest rate of 3.625%.