It seems the big discussion in the mortgage world lately has been about interest rates. I think it is important to put the discussion into some context, and what better context than to look at interest rates historically. The chart below tells the whole story. You can see that the average interest rate level in our country dating back over 40 years is quite high compared to current interest rates. The average interest rate is quite high compared to current rates even if they go up another 1%. The average interest rate is still higher when compared to current rates even if they go up another 2%. Read the rest of this entry »
I get a lot of excited questions based on information people see on the latest “average interest rate” news. This data is usually published monthly by the media, so it is a regular source of misleading data.
The average interest rate is a compilation of a lot of different interest rate quotes and variables, that do not apply to everyone’s exact situation. The average interest rate is a national average figure, with interest rate quotes from across the country that may not apply locally, and many times also includes interest rate quotes with points. But most consumers do loans with 0 points. Hence, the “average interest rate” you see on TV or in the newspaper always looks artificially low. Read the rest of this entry »