April 13, 2010

How Much Do Mortgage Interest Rates Change Year to Year?

A while back I did a plot of the historical interest rates on 30 year mortgages from 1971 to 2008.   We can take that data to see how much the interest rates change from year to year.



Out of the 37 years the interest rate changed by less than 1% (plus or minus) 27 times.   The rate changed from 1% to 2% a total of 6 times.    Rates changed by over 2% only 4 times.   The majority of years rates grew or dropped by less than 1%.   Taking a little closer look at the data we see that most of the changes in the 1-2% range were 1.1%.    In 5 years there was less than 0.1% change in the interest rate or virtually no change.

You can notice a particularly bad stretch from 1977 to 1981 when interest rates went up considerably every year.   That 4 year period saw rates climb almost 8%.     The largest drop was in 1985 to 1987 when rates dropped 3.7%. 

Bottom Line :  Most of the time rates change less than 1% a year.   However some years rates went up or down almost as much as 3% in a single year.   Rates can climb as much as 8% over a 4 year period.

1 comment:

  1. Good analysis. At least we know the previous 30+ year trend.

    ReplyDelete

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