By Peter Ricci
In case you missed it, Freddie Mac announced what has by now become common in real estate – mortgage interest rates hit new record lows last week, with the 30-year FRM falling to 3.34 percent and the 15-year FRM falling to 2.65 percent.
Both rates are now more than 60 basis points lower than they were a year ago, and such a statistic got us thinking – how have mortgage interest rates behaved in all of 2012? And how does that behavior compare with year’s past?
Mortgage Interest Rates – Year in Review
For some perspective on that question, we did some digging through the Freddie Mac archives, and found some very interesting data.
First of all, there’s 2012, and how the 15- and 30-year FRMs have performed. Here’s a chart showing the progress of the 30-year:
As you can tell, though a 60-basis-point drop is quite impressive, and though we’re not yet through in 2012, it’s safe to assume that the yearly projection for the 30-year FRM will be that of negative declines. But how does it compare with the 15-year?
Pretty closely, in fact! The two mortgage interest rates have risen and declined in nearly perfect syncopation.
A Historical Primer on Mortgage Interest Rates
Now, that may be all fun and grand, but how do the rates of 2012 compare with those of previous years? To answer that, we looked at both the 15- and 30-year FRMs, and compared the 2012 rates with those of previous years. Starting with the 15-year, here’s what we found:
We went back by 10-year intervals, and compared the rates of 2012 to those of 2002 and 1992, and found that rates have actually fallen across each respective decade. Interestingly, the trend for the rates is also similar for all three sets of data, with interest rates gradually falling as the year progresses.
Freddie’s data for the 15-year FRM is a bit limited, though, and we found even more impressive data for the 30-year FRM:
Now that is a dramatic change! Just comparing the rates in the year 1982 (when anti-inflation monetary policy from the Federal Reserve sent interest rates through the roof) to those of 2012, you’re looking at a more than 300 percent decline in some spots of the year. And because Freddie’s data on the 30-year FRM is a bit more robust, we have some interest outliers, such as the increase in rates in the early 90s that pushed it beyond the rates of the early 70s.
The 20-year trend of the 15-year, though, did remain consistent with the 30-year – rates have gradually declined.