What is the highest mortgage ever?
What's the Highest Mortgage Rate in History? From 1971 to present, the highest average mortgage rate ever recorded was 18.63% in October 1981.
| Units | Contiguous States, District of Columbia, and Puerto Rico* |
|---|---|
| 1 | $1,149,825 |
| 2 | $1,472,250 |
| 3 | $1,779,525 |
| 4 | $2,211,600 |
Spurred by the Great Inflation, the 30-year fixed mortgage rate reached a pinnacle of 18.4 percent in October 1981, according to Freddie Mac. Once the Fed reined in inflation, the 30-year rate seesawed down to the 9 percent range, closing the decade at 9.78 percent.
The Fed began to raise interest rates in an effort to ease inflation, and mortgage rates followed suit. By mid-May 2022, the average 30-year mortgage rate reached 5.3%, and rates soared past the 6% mark by the end of the year. Rates reached 7.79% in October 2023 — the highest in 20 years.
A 40-year mortgage means that if you made all payments as scheduled without making extra or bigger payments toward the principal to pay it off sooner, it would take 40 years to pay off the home. Traditionally, mortgages come in loans anywhere between 8 – 30 years. In some cases, 40-year loans may have other features.
Interest rates reached their highest point in modern history in October 1981 when they peaked at 18.63%, according to the Freddie Mac data. Fixed mortgage rates declined from there, but they finished the decade at around 10%.
Lenders traditionally offer an amount between four and five times your income, though in some cases they may offer more or less than this. If you are borrowing with a partner there are a few ways a lender might combine your incomes.
Interest Rate in the United States averaged 5.42 percent from 1971 until 2024, reaching an all time high of 20.00 percent in March of 1980 and a record low of 0.25 percent in December of 2008.
Mortgage rates have been historic in their own right during the past few years. The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac.
Mortgage rates have fluctuated dramatically in the last 50 years of recorded data by Freddie Mac. While rates peaked at 7.79% in October 2023, this still pales compared to the spikes in the early 1980s when the 30-year fixed rate exceeded 18%.
Will interest rates ever go back to 3?
It's possible that rates will one day go back down to 3%, though if current trends hold that's not likely to happen anytime soon.
This means a 7% interest rate would earn around 15X more than the national average. At the moment, there are no banks or credit unions currently offering 7% interest on savings accounts, but that doesn't mean you won't ever find a rate that high or won't be able to access another impressive APY on savings.
Near the end of October 2022, the 30-year mortgage rate jumped from 6.94% to 7.08%, according to Mortgage buyer Freddie Mac. Prior to that, the last time the average mortgage rate hovered around 7% was in April of 2002.
On a salary of $100,000 per year, as long as you have minimal debt, you can afford a house priced at around $311,000 with a monthly payment of $2,333. This number assumes a 6.5% interest rate and a down payment of around $30,000. The 28/36 rule is often used as a guide when deciding how much house you can afford.
The 35/45 rule
With the 35/45 model, your total monthly debt, including your mortgage payment, shouldn't exceed 35% of your pre-tax income or 45% of your after-tax income. To estimate your affordable range, multiply your gross income before taxes by 0.35 and your net income after taxes by 0.45.
According to the 28/36 rule, it's best not to spend more than 28 percent of your income on housing costs. So, with a $200,000 annual income, it's ideal not to exceed $56,000, or $4,666 per month, on your mortgage payment and associated housing costs.
So if you're on the fence about buying or refinancing a home this winter, know that January and February bring some of the lowest mortgage rates of the year.
The answer: Mortgage rates should keep falling in 2024. The larger-than-expected slash to the fed funds rate and an indication that it will cut rates again this year should result in lower mortgage interest rates. Mortgage rates will also likely decrease throughout 2025.
“Today's mortgage rates reflect higher yields in the bond market, but also a relatively wide premium spread between 10-year U.S. Treasury notes and mortgage rates,” says Haworth. The spread was recently nearly twice what it was in early 2022, contributing to more burdensome mortgage rates.
For 2024, the Federal Housing Finance Agency (FHFA) raised the maximum conforming loan limit for a single-family property to $766,550 from $726,200 (in 2023). In certain high-cost areas, the ceiling for conforming mortgage limits is 150% of that limit, or $1,149,825 for 2024.
What is the largest loan you can get?
Personal Loan Maximums
Most lenders state that their maximum personal loan amount is $50,000, though some will go as high as $100,000. Some borrowers, usually wealthy and with high credit scores, might be able to borrow more.
With a $70,000 annual salary and using a 50% DTI, your home buying budget could potentially afford a house priced between $180,000 to $280,000, depending on your financial situation, credit score, and current market conditions. This range is higher than what you might qualify for with more traditional DTI limits.
The 30-year mortgage rate spiked and receded throughout the 1980s. It peaked in October 1981, reaching an average rate of 18.45%, which is the highest rate ever recorded.
The 1970s and 1980s
As we headed into the 80s, it's important to note that the country was in the middle of a recession, largely caused by the oil crises of 1973 and 1979. The second oil shock caused skyrocketing inflation. The cost of goods and services rose, so fittingly, mortgage rates did too.
30 Year Mortgage Rate in the United States averaged 7.72 percent from 1971 until 2024, reaching an all time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021.
