HIGH MORTGAGE INTEREST RATES THROUGHOUT HISTORY: A REAL ESTATE PROFESSIONAL’S GUIDE TO SUCCESS
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In a recent conversation with my father, the topic of his first home purchase in the 1970s came up. Although he couldn’t recall the exact mortgage rate, he vividly remembered buying a modest $9,000 “shack.” What struck me most was when he shared that he paid the debt off in three months, a practice instilled in him as a life principle – never carry debt.
Given today’s soaring housing costs, clearing a mortgage within months might sound appealing. However, that approach seems nearly impossible, with homes reaching hundreds of thousands of dollars.
Nostalgic Snapshot: My Parent’s Shack Demolition
In this timeless photo, captured years ago, you’ll witness the humble beginnings of my father’s homeownership journey. Back in the 1970s, in his 20s, he leaped by purchasing a small shack. The image showcases this shack amid demolition as we prepared to build our next family home.
During this transformative period, we temporarily resided in the garage behind the soon-to-be-demolished shack. The garage served as our makeshift living space, complete with a sink for baths and sheets that acted as walls. As for facilities, our trusty camper trailer was parked behind the garage, ensuring we had access to essential amenities like a toilet. I was a curious 8-year-old at the time, observing this remarkable journey unfold. It’s a snapshot that holds countless memories and reminds us of the remarkable transformations life can bring.
The History of High Mortgage Interest Rates and How to Thrive Amid High Rates
Surviving the top seven highest mortgage rates in history required insight and savvy strategies. As a realtor and real estate investor, understanding these historical peaks can empower you to guide your clients successfully through their real estate journey.
1. 1981 - A Staggering 18.63%
In the early ’80s, the United States had its highest mortgage rate ever—a jaw-dropping 18.63%. Helping your clients navigate such peaks involves exploring alternative financing options, such as adjustable-rate mortgages or creative loan structures, to ease the financial burden.
2. 1982 - 17.63%
In 1982, the mortgage rate remained exceptionally high, at 17.63%. The key to success in this climate is to inform your clients about refinancing options and fixed-rate mortgages to lock in rates before they rise further.
3. 1984 - 14.67%
Mortgage rates were 14.67% in the mid-’80s, presenting a challenging market for homebuyers. As a realtor and real estate investor, it’s essential to highlight the benefits of real estate as a long-term investment and explain how home appreciation can offset higher interest costs.
4. 1990 - 10.67%
In 1990, rates were still in double digits at 10.67%. To thrive in this environment, you should emphasize the importance of a strong credit score, as it can significantly impact the interest rate offered to your clients.
5. 2000 - 8.05%
At the turn of the century, rates hovered around 8.05%. Encourage clients to explore various lenders to secure the best possible deal and consider adjustable-rate mortgages for short-term investments.
6. 2007 - 6.34%
The pre-Great Recession era featured a 6.34% rate. Please help your clients navigate this period by encouraging thorough financial assessments and consider advising them to pay additional principal to offset the interest costs.
My husband and I celebrated our 1st year of marriage and bought our first home in 2007.
Our First Home Purchase: A Journey of Transformation
In this image, you’ll witness the beginning of a remarkable journey as my husband and I embark on our first home purchase. This significant milestone marked the inception of an exciting adventure in home renovation and remodeling—the original price of this home was $62,000. Over $80,000 in renovation costs!
With little formal education in flipping or remodeling a home, our journey was fueled by determination, inspiration from my parents, and a vision of turning a house into a dream home. This image encapsulates the inception of a transformative process, a testament to our dedication to creating a space uniquely our own.
7. 2023 - 7.36% (As of October 11)
Today’s mortgage rates are high, at 7.36%. This current challenge presents an opportunity for realtors to showcase the long-term value of homeownership and explore financial options to mitigate the impact of high-interest rates. It would be better to be in a home paying off your investment than paying rent to someone else’s investment.
In my opinion, the rates are not high enough to not purchase a home.
For Montana Homebuyers, Local Banking is the Way to Go
When it comes to shopping for a home in Montana, I can’t stress enough how important choosing a local bank is. One that stands out is Stockman Bank. You can find them them here.
For North Dakota, Minnesota, South Dakota, and Arizona, I highly recommend First International Bank and Trust. You can find them here. Not only do they have a long-standing reputation for excellent customer service, but their rates are also consistently hard to beat.
Please let us know if you have any local recommendations or experiences to share.
Closing Thoughts
So, there you have it – high mortgage interest rates throughout U.S. history. Surviving and succeeding amid the highest mortgage rates in history is possible with the right strategies and guidance. As a realtor and real estate investor, your expertise is invaluable in helping clients make informed decisions and secure the best possible deals in today’s dynamic real estate market. So, whether you’re reminiscing or planning for the future, remember that adaptability and knowledge are your greatest assets in the ever-evolving world of real estate.
If you want to learn more about how to sell houses efficiently as a realtor, read this article. With the right information and continued effort, you can become a top realtor.
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