By Sabrina Karl
You keep seeing it in the news: Mortgage rates are at all-time lows. But how low is that? And when was the last time we came close to rates like this?
The headlines refer to Freddie Mac’s national weekly mortgage rate average. Freddie Mac has been surveying U.S. mortgage lenders since 1971 to compile weekly averages for 30-year fixed, 15-year fixed, and 5/1 adjustable-rate mortgages. The rates included in the survey have an 80% loan-to-value ratio.
Freddie Mac collects its rates every Monday through Wednesday and reports the weekly averages every Thursday at 10 a.m. ET. Last Thursday, the 30-year fixed-rate average was 3.31% APY.
That’s just 2 basis points above the lowest average Freddie Mac has ever recorded since it began tracking in 1971. On Thursday, March 6, the average was a record-setting 3.29% APY.
But how does this compare to the past? Did we just set the record by a few basis points, or a wide margin? What about the record lows of 2012?
A look at rate averages since 1971 shows that rates today are nothing like those in the 70s, 80s, or 90s. During those three decades, the average 30-year rate never fell below 6%. And dipping into the 5% range didn’t happen until late 2002.
It then took us until January 2009, another 7+ years, before we ever dropped into the 4% range. And then another three years before we first hit the 3% range, in October 2011.
Then came Nov. 21, 2012, when the 30-year average sunk to its previous historic low of 3.31% APY.
That means today’s average closely matches the previous low, when millions of Americans refinanced. But since few were lucky enough to lock in the very lowest rate, significant opportunity exists for millions to score a second chance.