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Interest Rate Chart

Interest Rate Chart! I wanted to do a video about interest rates.

Look at the chart

I found a really interesting chart that shows you rates going back hundreds of years. It doesn’t quite go to the current day to 2017. But it’s interesting when you take a look at the big picture. Interest rates today are arguably, since the 2008 economic debacle, very low. Threes and fours and somewhere in there through today. Although of course interest rates have been trending up a bit since the election of President Donald Trump.

What does history say about very low rates?

Going back over time, when you look at this 3s and 4s interest rate level, it’s happened a few other times. The only other time it’s been quite as low has been right around the Great Depression through the 1940s. Things finally started to take off again in the 1950s, and ’60s and ’70s and ’80s.

Continuing back in time, maybe you could argue right around 1900, the panic of 1907. Interest rates in 1900 were 3.71%. But really, when you look at the whole scale, rates have only been this low a couple of times in history out of 225, 230 years.

Median rates – Interest Rate Chart

When you look at the kind of the median interest rate level, I would say that’s around, arguably around the mid-sixes. So isn’t that interesting that over time, the rates that we have now could go up one or two percentage points. Which I think would psychologically alarm everybody. And it certainly would be a bit of a fiscal penalty, but would really fall right in line with the average.

When are rates considered high?

I don’t know that you could call rates high until maybe you get closer up into the eight, and certainly higher. Those higher rates seem to be rare. So we’ve got a lot of room to the upside and probably no down side. Just looking at the historical chart, once rates start to trend up again, I don’t know that we’re going to see rates like this again. Maybe not ever in our lifetime.

How will rates affect housing?

Then there’s lots of questions surrounding what will higher interest rates do to housing prices. Rising rates threaten to complicate the 2017 housing outlook. Rates may not matter for housing. How will US home prices fair in 2017, how the Fed’s interest rate increase can affect you? So obviously, it’s an unknown.

What else can impact housing prices?

There’s a lot of moving parts to housing prices, demographic shift, wage growth, population growth, certainly interest rates. But it will be an interesting period of time going forward to see what rates do and how it affects things in the next couple of years.

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