Lately, I’ve been a hearing a lot of people say that mortgage rates are “average” or “normal.”
As in, they aren’t high or low. They’re just typical.
This is usually in response to someone pointing out that they’re much higher than they were just a couple years ago.
In a way, it feels like a dismissal that rates are high today. And it’s usually accompanied by something like, “Do you know how high rates were when I bought my first home?!”
Problem is, that doesn’t do anyone any good. Who cares what they were decades ago. Or what they averaged since the 1970s?
What Is the Historical Average 30-Year Mortgage Rate?
While it doesn’t necessarily matter what the long-term average of the 30-year fixed is, I might as well tell you.
I did the research and put in some time with spreadsheets tallying up historical Freddie Mac data, so it’d be a waste not to share it.
Since 1972, the first complete year Freddie Mac compiled mortgage rate data, through the end of 2023, the 30-year fixed has averaged roughly 7.75%.
Technically 7.74%, but who’s counting (a single basis point)?
At last glance, the 30-year averaged 6.78%, per the company’s latest weekly Primary Mortgage Market Survey (PMMS).
So someone could arguably tell you that rates aren’t that high at the moment. After all, they’re about a full percentage point below their long-term average.
They could also point out those notorious 1980s mortgage rates in the double-digits.
But does this mean anything to the prospective home buyer facing all-time high prices today? Or the recent home buyer looking for relief via a rate and term refinance?
Probably not. It’s really just educational. Or a sales mechanism to get you to believe rates aren’t so bad.
I Don’t Like When People Say Mortgage Rates Are Average (Or Normal)
As I pointed out earlier, a lot of folks are throwing around the idea that mortgage rates are just average today. Or normal.
In other words, don’t fuss. They’re fine. They’re good enough. They’ve been worse. Blah blah blah.
Problem is, this doesn’t capture recent levels, when they were in the 2-3% range. It also largely ignores that rates were in the 2-4% range for much of the past decade.
While people might forget, you could snag a 30-year fixed in the high-2% range all the way back in 2012 and 2013.
This wasn’t just a pandemic fluke. Simply put, super low mortgage rates were around for a long time in recent history.
Basically since the early 2000s mortgage crisis, they’ve been very low.
It wasn’t until mid-2022 that fixed mortgage rates surged higher, meaning it’s still a relatively new development.
And something many prospective home buyers (and existing homeowners) are still reconciling.
So telling someone, “Relax, they’re normal.” Or that they’re “average” doesn’t provide much solace.
They can just as easily respond by saying, “Well, they were 2% a few years ago and are now 7%.”
It wasn’t just the magnitude of the change, but also the velocity of change. Mortgage rates more than doubled in less than a year.
And nearly tripled in the span of less than two years. That’s unprecedented, even if the rates pale in comparison to the double-digit ones seen in the 1980s.
Just Tell People the Truth About Mortgage Rates
If you work in the mortgage industry, or are a real estate agent, don’t tell people mortgage rates are average or normal.
Just be honest and tell them that they’re a lot higher than they used to be. This level of transparency can work to your advantage.
You’re not trying to trick them into buying a home or taking out a mortgage. You’re supposed to be their guide and their ally, someone who helps them make sense of the ever-changing market.
And if you take that approach, it might make you stand out from the crowd.
I’ll never forget a real estate agent I met with who told me not to sell a property. She said to keep it long-term and let it appreciate in value.
She intentionally missed out on the listing because she was honest. If/when I do sell that property, she will be at the top of my list for that reason.
Same goes for someone who needs a mortgage. Being honest could help you acquire their busienss in the future, even if it’s not today.
In addition, they might refer you to family, friends, colleagues, etc. So there’s absolutely no harm in calling a spade a spade here.
Give them the complete picture. Show them where rates are today, where they were a year ago, two years ago, and where they might be in 2025 and beyond.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.