In the heat of the summer 2025 homebuying season, mortgage rates feel uncomfortably high. But when someone points out that mortgages are still painfully expensive right now, a well-seasoned homeowner is quick to chime in, “When I bought my first house in the ’80s, the interest rate was 13%.”
In fact, mortgage rates have gone as high as 18.63% in October 1981. Keep reading to learn more about how mortgage rates have changed over time, what moves interest rates and how these have impacted the housing market throughout history.
[Compare: Compare Current Mortgage Rates]
Historical Mortgage Rates Chart
Historical Mortgage Rates by Decade
| Minimum Mortgage Rate | Maximum Mortgage Rate | Median Mortgage Rate | |
| 1971-1979 | 7.23% | 12.9% | 8.89% |
| 1980-1989 | 9.03% | 18.63% | 12.82% |
| 1990-1999 | 6.49% | 10.67% | 7.88% |
| 2000-2009 | 4.71% | 8.64% | 6.18% |
| 2010-2019 | 3.31% | 5.21% | 4.03% |
| 2020-Present | 2.65% | 7.79% | 6.14% |
The graphic above shows how mortgage rates have fluctuated over the past five decades. It’s evident that while today’s mortgage rates are high compared with just a few years ago, they’re actually quite typical from a historical standpoint.
Of course, you can’t talk about the history of mortgage rates without comparing other metrics like home prices and incomes. The median price for new single-family homes sold in the U.S. during 1981 — when mortgage rates reached record highs — was $68,900, according to Census Bureau data. That would be equivalent to around $238,000 in today’s dollars, using the consumer price index inflation calculator. Meanwhile, the actual median new home sales price is $401,800 as of June 2025.
The monthly mortgage principal and interest payment on a home at 1981 prices with an 18% mortgage rate would be $831, assuming a 20% down payment and using our mortgage calculator. On the other hand, a home at today’s prices and a 6.5% rate would come with a monthly P&I payment of over $2,000.
But don’t forget to account for inflation: That $831 housing payment in 1981 would cost nearly $2,900 today.
Lastly, consider earnings versus housing expenses. The median household income in 1981 was $22,390 per the Census Bureau, and that salary would be equivalent to about $77,450 today. The observed household income in the U.S. was $80,610 in 2023, according to the most recent census.
All told, housing affordability is actually fairly similar to what it was in the ’80s, but remember the context: Housing affordability was at record-low levels back then. So next time you hear about how high mortgage rates were in 1981, keep in mind that homebuying conditions are just as challenging now — even though rates are much lower.
Historical Mortgage Rate FAQs
[See: 2025 Mortgage Rate Forecast: When Will Rates Go Down?]
How Mortgage Rates Impact the Housing Market
Mortgage rates aren’t the reason people move, but they can influence whether a first-time homebuyer can afford a home or whether homeowners decide to sell, refinance or stay put.
Lower mortgage interest rates translate to lower monthly housing payments, which can encourage homebuying. And the opposite is true: When rates are high, homebuying becomes more expensive, and some shoppers may simply be priced out. Here’s how that’s played out in previous years.
Mortgage Rates and Home Prices
Historically, mortgage rates haven’t had an outsized impact on the housing market, at least not as much as other factors like seasonality or recessions in the U.S. economy — until recently.
Let’s look at the housing market in the context of the Great Recession until today. In the years following the 2008 housing bubble burst, the real estate market was injected with inventory from subprime foreclosures, and home prices crashed. From the peak in late 2006 to the trough in early 2012, home prices declined by 27%, according to the Case-Shiller Home Price Index. Suffice to say, Americans weren’t too busy thinking about their mortgage rate, but about their property values.
Things stayed relatively uneventful in the housing market during most of the decade following the Great Recession. Mortgage rates hovered steadily in the 3.5% to 5.5% range in the 2010s. By 2017, home values recovered from the damage sustained during the 2008 crash, and home price appreciation carried on at a typical rate of a few percentage points per year. That is, until the COVID-19 pandemic ushered in an era of record-low mortgage rates. With mortgage rates at 3% or even lower, more homebuyers could afford to enter the market in the early 2020s. Home sales activity picked up, but housing inventory was insufficient to keep up with demand. Decades of housing underproduction in the U.S. meant that there were now more homebuyers than homes for sale, which fostered competition and drove home prices to unforeseen levels. From the start of the pandemic in March 2020 until the Federal Reserve began hiking rates in March 2022, home prices grew 37%, per Case-Shiller.
In late 2022, home sales activity came to an abrupt halt when mortgage rates climbed from about 3% to above 7% in a matter of months. Buyers are still facing higher mortgage rates than they’ve seen in recent memory — on top of that, home prices are still staying stubbornly high after the pandemic housing boom. For many, especially first-time homebuyers who lack tappable equity, monthly mortgage payments have become too expensive at these new interest rates.
The housing market is in a mortgage rate stalemate: Homebuyers are priced out, and homeowners are reluctant to sell and trade in their low mortgage rates.
[2025 Survey 4 in 5 Homebuyers Are Still Waiting for Lower Mortgage Rates]
Mortgage Rates and Refinancing Activity
Refinance demand tends to be more sensitive to mortgage rates than home purchase demand. That’s because for many homeowners, the goal of refinancing is to lock in a lower mortgage rate.
Of course, there are other reasons people refinance, whether they want to switch from an adjustable mortgage rate to a fixed one or tap their home’s equity with a cash-out refinance. But the primary draw of a refinance is to save money via a lower mortgage interest rate.
When mortgage rates fell to record lows in the early 2020s, millions of homeowners took the opportunity to refinance to a sub-3% rate. According to the Federal Housing Finance Agency, 81% of existing mortgages have an interest rate below 6% — and 21% carry a rate below 3%.
Nearly everyone with a mortgage has a lower rate than what’s currently available, and, as a result, refinance activity has plunged over the past two years. Refinance applications are down 78.5% compared with the height of the 2020 refinance boom, according to Fannie Mae’s Refinance Application-Level Index.
Even today’s homebuyers are feeling the impact of that refi boom. Current homeowners have little incentive to sell (and risk losing a record-low mortgage rate), which is keeping home sales stagnant.
It’s creating a unique, or one might say a historic, situation: Home sales are down, but home prices are propped up. And for many Americans, the only choice is to wait for mortgage rates to improve.
More from U.S. News
2025 Mortgage Rate Forecast: When Will Rates Go Down?
Survey: Unwilling to Sell, Many Homeowners Remodel Instead
Should You Wait for Mortgage Rates to Fall to Buy a House?
Historical Mortgage Rates: See Averages and Trends by Decade originally appeared on usnews.com
Update 08/27/25: This story was previously published at an earlier date and has been updated with new information.
