Over the past 25 years, interest rates have taken us on a wild journey, impacting our finances, investments, and economic decisions. Let’s take a look at how these rates have changed and what it means for us.
The 90s Boom
In the late 1990s, interest rates were relatively high, with the Federal Reserve raising them to combat inflation. Mortgage rates were in the 7-9% range, making borrowing expensive.
The New Millennium
As we entered the 2000s, rates began to drop. The dot-com bubble burst, and the 9/11 attacks led to the Fed lowering rates to stimulate the economy. Mortgage rates fell below 7%.
By the mid-2000s, easy credit fueled the housing bubble. Interest rates were relatively low, but predatory lending practices led to a housing market crash and the Great Recession in 2008.
Near Zero Rates
In response to the financial crisis, the Federal Reserve slashed rates to near zero. Mortgage rates plummeted to historic lows, allowing many to refinance their homes or buy new ones.
After years of near-zero rates, the economy slowly recovered. Rates began to rise slightly but remained historically low, around 4-5% for mortgages.
The Pandemic Plunge
The COVID-19 pandemic hit in 2020, and the Fed swiftly lowered rates again to support the economy. Mortgage rates dropped below 3%, driving a surge in refinancing and home purchases.
As of 2022, rates have started to inch higher, but the future remains uncertain. The Fed is cautious about potential inflation and its impact on interest rates.
The past 25 years have seen interest rates fluctuate dramatically, impacting various aspects of our financial lives. Understanding these changes and their effects is crucial for making informed financial decisions in the future. Have more questions about interests and how it is affecting your real estate goals? Contact us!
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