If you’ve been thinking about buying a home or you follow real estate news, you have likely heard that interest rates are very low right now. In fact, they’re not just low—they’re lower than they’ve ever been in history. Since interest rates are so low, how do today’s mortgage payments compare to those in decades past?
Today’s Mortgage Payments Are Lower Than in Any Other Decade
Low interest rates might not mean much to you until you see the dollars and cents you’ll pay—or save—at various interest rates. When interest rates are low, it means it’s less expensive to borrow money, so you’ll save a lot over the life of your loan. Here’s how today’s mortgage payments compare to those your parents or grandparents might have paid for a $300,000 home.
Payments were highest in the 80s
Interest rates reached all-time highs in the 1980s. The average rate sat around 12.7%, which is quite a bit higher than today’s rates! For a $300,000 home, a buyer in the 80s would pay about $3,284 per month.
The 70s and 90s saw more moderate rates
Both the 70s and the 90s saw more relaxed rates than the 80s, but these rates were still by no means low. In the 70s, buyers could expect an interest rate of about 8.86%, or a monthly payment of $2,384. In the 90s, rates were only slightly lower, at 8.12%, yielding a $2,267 monthly payment.
The 2000s and 2010s brought some relief
Going into the new millennium, interest rates fell to an average of 6.29%, for an average monthly mortgage payment of $1,855. In the 2010s, rates fell even further, reaching a new low in 2012, for an average rate of 4.09% and a monthly payment of just $1,448.
Today’s rates blow the rest away
Rates in the 2010s seemed pretty manageable, but today’s rates are far beyond what the last decade could offer. In the 2020s, our average rate is just 2.96%—for an average monthly payment of just $1,258 for a $300,000 home.
That’s less than HALF of what a buyer in 1980 would have paid. It’s almost $600 dollars less than a buyer in 2010 would have paid. And it’s about $200 less than what buyers would have paid just a year ago. While that $200 might not seem like a lot, consider your savings over a year—$2,400—or over the duration of a 30-year loan—$72,000.
That is a lot of money you can save just by buying a home with a low interest rate. If you’ve been hesitant about entering the market, you can at least rest assured that the math is definitely on your side.
Considering Buying a Home in the Triangle?
Have you been thinking about making a move in the Triangle area? Linda Craft & Team would love to help. Contact us today at 919-235-0007 to learn more about how we can put our 350+ years of combined experience to work for you. It’s a great time to buy, and we’d love to help you find your dream home in the Raleigh area!