Are Today's Mortgage Rates the Highest They've Ever Been?

If you're a prospective home buyer, you may be frustrated by the high cost of signing a mortgage at a time when home prices are also high. As of Dec. 14, the average 30-year mortgage rate was 6.95%, according to Freddie Mac. Given that mortgage rates were close to 8% in October, that doesn't seem like such an unreasonable number.

Still, you may be longing for the days of the 3% mortgage, and unfortunately, those may not resurface anytime soon. On the other hand, you should know that today's mortgage rates are by no means the highest rates have ever been.

Borrowing costs have been way higher in the past

Back in 2020 and 2021, it was possible to sign a 30-year mortgage at 3%. So signing one at around 7% might seem like a real bummer.

But here's something that might make you feel a lot better about a 7% mortgage -- back in the early 1980s, it wasn't unusual to get stuck with an 18% rate on a mortgage. Granted, home prices were a lot cheaper back then. But still, 18% is hardly a competitive interest rate -- yet plenty of people signed up at that level because that's what was available at the time.

Now to be fair, 18% mortgage rates are sort of an extreme, even if they were reality for a period of time. But 7% isn't such an extreme borrowing rate. In the late 1990s and early 2002, mortgages in the 7% range were quite common. Rates were similarly high in the early and mid-1990s, too.

So all told, today's mortgage rates aren't so unusual. Rather, it's just that borrowers got used to seeing rates at a much lower level. Plus, home prices have jumped over the past few years, too.

How to eke out savings on a mortgage

One thing to keep in mind about today's mortgage rates is that the rate you sign at may not be the rate you're stuck with forever. There's always the option to refinance a mortgage when rates fall and lock in savings.

That said, if you're in the market for a mortgage now, one of the best things you can do to snag the most competitive rate possible is to boost your credit score. You can do so by paying all bills on time, whittling down existing credit card balances, and checking your credit report for errors (which, thankfully, you can do at no cost to you).

Another good bet is to shop around with different mortgage lenders. You never know when one might offer you a better deal than another.

You may not relish the idea of signing a 7% mortgage, especially knowing that had you done so a couple of years ago, you might've locked in a much lower rate. But since you can't go back in time, you might as well accept today's rates for what they are. If you can afford a mortgage based on today's rates, move forward if you find a home that meets your needs and hope that soon enough, an opportunity to refinance will present itself.