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How high are today’s mortgage rates?

Today’s mortgage rates are far from the highest they’ve ever been.

Back in the early 1980s, it wasn't uncommon to see mortgage rates in the 18% range. However, back then, home values were also much lower. So all told, average earners were still in a better position to buy.

When we compare today's mortgage rates to pre-pandemic rates (because the record-low rates that emerged during the pandemic were truly not the norm), we can see that there's been a huge increase. In June of 2019, the average 30-year mortgage rate was a notch under 4%.

But mortgage rates play a huge role in home affordability. A $400,000 home bought with a 20% downpayment and a 30-year fixed mortgage at 7% would result in monthly payments of $2,879. That same loan with a 4% interest rate costs $2,277 in monthly payments.

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How much higher are home prices today?

It’s not just that mortgage rates are higher today. Home prices are higher as well – largely, at this point, due to a lack of inventory. Zillow says the U.S. housing shortage grew to 4.5 million homes in 2022, up from 4.3 million in 2021. In 2022, the number of U.S. families increased by 1.8 million, while only 1.4 million housing units were built.

"The simple fact is there are not enough homes in this country, and that's pushing homeownership out of reach for too many families," said Orphe Divounguy, senior economist at Zillow. "The affordability crisis extends to renters as well, with nearly half of renter households being cost burdened. Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it."

During the first quarter of 2019, the median U.S. home sale price was $313,000, per the Federal Reserve. During the first quarter of 2024, it was $420,800.

What if the dream is unrealized?

It’s true that now’s a very difficult time to buy a home. But interest rates are likely to fall at some point, whether it’s 2025, 2026, or beyond. That should ease some of the burden on homebuyers.

That said, homeownership is not the only ticket to attaining financial success. It’s possible to rent a home and invest the money you’re not spending on property taxes and upkeep. So if you decide not to pursue homeownership, do not assume that you’re doomed financially. If you want to include real estate in your portfolio without owning property, you can consider real estate investment trusts (REITs).


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Maurie Backman Freelance Writer

Maurie Backman is a freelance contributor to Moneywise, who has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate.


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