US Historical Mortgage Rate Trends

How much longer can mortgage rates fall?

In this chart, from macrotrends.com, you will see 30 year mortgage rates since 1971. Rates peaked in 1981 at 18.44%. But for the past 40 years, mortgage rates have been generally falling.

I added a red best fit line for the years since 1985 and extended it to see at what point it would hit 0%. If the general trend continues, in about 10 years mortgage rates would be zero.

But it is not possible for mortgage rates to be 0%, because mortgage rates are based on the 10 year treasury rate plus a mark up. The difference between the two tends to be around 1.8%. Even if 10 year treasury rates were 0%, mortgage rates would still be around 2%.

I extended the 2% line in green, to show at what point we would hit 2%, if the trends continue. Given those assumptions, mortgage rates would hit the lowest possible rate around 2024, ending a 43 year trend.

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