Credit: Dan Moyle, Flickr.

Scraping together enough money for a down payment on a home -- especially a first home -- can be a difficult endeavor. Don't wail "woe is me" too loudly, though, as things could be worse. Take a look at mortgage interest rates through history for some sobering perspective.

Mortgage interest rates as of June 2014 averaged 4.16% for a conventional 30-year fixed-rate mortgage. Here's how mortgage interest rates looked in previous Junes:





















Source: FreddieMac.com.

Some of the mortgage interest rates above are kind of appalling, as they clearly would have made life difficult for borrowers. It wasn't all bad, though, because when borrowers are suffering, savers are enjoying fat interest rates from banks and bonds. In June 1980, the rate on 30-year Treasury bonds was 9.99%. Of course, the inflation rate was around 14%, too. What was going on? Well, the Vietnam War had recently ended, and it had been costly in many ways. The 1979 revolution in Iran led to high oil prices. American productivity dropped, and unemployment was rising. The early 1980s featured a sharp recession, which hit rock-bottom in 1982. In order to get inflation under control, the Federal Reserve enacted a series of interest rate hikes.

The cost of mortgage interest rates
Now let's apply this historical perspective to home buyers. My colleague Morgan Housel illustrated the effect of rising mortgage interest rates perfectly in an article last year, when rates were around 4.46% -- not too much higher than they are today. At that rate, a $250,000 30-year fixed-rate loan would have led to a monthly payment of $1,261. But back in 1980, a monthly payment would have been $2,917 -- a full 131% more! When mortgage interest rates are high, there are a lot of ramifications: Your interest costs are high, your monthly payments are steep, and you can't afford as much house. If this persists across America, it might lead home prices to fall in order to match up buyers and sellers.

There are some other considerations, too. In an environment of rising mortgage interest rates, fewer homeowners may be willing to sell their homes. They may want to, but to sell their home and buy another, they'll have to get a new loan, and it will cost them more. With current rates so low (and gradually rising from even lower levels), this could affect current buyers -- especially if rates get much higher.

The big picture
Interest rates and inflation rates can have a big effect on your financial life and our nation's overall health. High rates reward savers, but low rates help borrowers and can spur the economy. Too much of that, though, can lead to inflation, which erodes the value of the money we've amassed. This is why managing interest rates is tricky, making Federal Reserve Chair Janet Yellen's job difficult.

However, you and I get to enjoy low rates, which can give us low monthly payments on the homes we buy. And even if average rates rise to, say, 5%, know that things could be, and have been, much worse.

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