220 Year History of Interest Rates

A while back, I published a chart of interest rates that went back about 40 years. I did this in an attempt to show that the recent increase in interest rates, as well as future interest rate increases, is not a major event when put into historical context. Interest rate history is almost as important as current interest rates.

I want to put this into a larger perspective. How about looking at a 220-year history of interest rates?

I found this 220-year chart on an investing website called The Capital Spectator.

Click image to enlarge.

It is fascinating to me to see long-term interest rate history data like this. It puts today’s financial numbers into perspective. It seems to me the average interest rate level in this country is about 6.5%, which is a long way from where we are now.

Interest rates were in the mid 6’s around 1789 when the US Constitution was ratified! So it always makes me chuckle a bit when a client is concerned that interest rates nudged up 1/8% or 1/4%, let’s say rates go from 4.25% to 4.50%. That is so far away from the average level of interest rates in this country.

I understand a client’s need for competitive terms on a mortgage. But I hope this chart helps us all realize that rates will be higher than they are now at some point, and then they’ll be lower, and then they’ll be higher yet again. The economy moves on, life continues, and everything works out OK.

If you’re ready to buy a home now and need a mortgage, start by getting a rate quote.