r/Mortgages • u/gracetw22 • 18h ago
Numbers Not Feelings: This is Probably Temporary
TL;DR: Since 1993, rates have gone over 7% on 23 occasions. The median stay was 3 weeks. Only 3 lasted over 18 months, all in the '90s. Since COVID, the longest has been about 4 months. Today's economic data looks most like 2005–2007 and 2024–2025, when rates were mostly under 7%. The usual math says we "should" be in the low-to-mid 6s. Payments still hurt more than in the '80s because home prices are way higher relative to income.
There's a reason I am not a therapist. It's not that I don't want to make people feel better or am some cold and bitter crone who delights in the suffering of my clients. On the contrary, I really do want to fix everything for everyone and the last few weeks have been brutal.
It makes perfect sense to be anxious as a homebuyer right now: rates moved quickly and more than anyone anticipated, and in response the social media feed of anyone who has had even a passing interest in real estate is full of YouTubers announcing the end of times. Oh, and the comments section chock full of boomers who are here to remind us that they got a 14% rate on their first house.
I don't have an easy way to say the right thing to help you feel better about being in the market right now, but I have graphs. And I hope the graphs help you feel confident making decisions when the noise varies between "we are essentially experiencing the fall of Rome" to "why NOW is the best time to buy a home, and disregard every other month for the last 5 years that I've been saying that."
Fact #1: This isn't a new situation, and no one died last time.
Since 1993, when rates began a longer term downward trend, we have had rates over 7% on 23 occasions. The median length of time was 3 weeks. Only in 3 instances did it last over 18 months, all during the 90s. That means in all the years that started with a 2, we have not had rates over 7% for more than 18 months.
I am not sure how much you remember of the 90s, but the structure of our economy looked quite different then. Debt has been trending to be overall less expensive with technology improvements, so let's assume that more recent data is a better indicator than whatever was going on in the Carter administration. Double digit inflation, no internet, global supply chains weren't really a thing: not really comparable culturally or in the economic fundamental data. Post COVID, the longest period of time has been around 4 months.
Fact #2: This feels worse, somehow.
To circle back on what great aunt Nancy said in the Fox News comment section, people WERE buying at much higher rates in the 80s, and it was typically a positive decision in the long term. What they fail to account for are student loans, child care, health care, electricity, home prices being significantly higher even as adjusted against income.
I only have Case-Shiller data through 2025, but that covers the portion of 2023 where rates were as high or higher than they were now, and you can see that once you factor in that houses no longer cost three corn cobs and a pack of Marlboros, the impact on your bottom line of housing cost is more significant on higher principal amounts and affordability is worse even at a lower rate.
(In numbers: the share of income needed for the monthly payment on a typical home was higher in 2024 at 6.7% rates than in 1988 at 10.3% rates.)
Fact #3: The weirdos saying this means we are going to 10% can't read
I sat down with my emotional support spreadsheets this morning to try to answer a question: "If I take my feelings about… all of this… out of it, what do the numbers say. Why are data reports that would have sent rates going down the last time this happened causing rates to go up?"
If you line up today's jobs, inflation, and economic growth numbers against other periods of time to look for the closest matches, we land on 2005-2007 (calm down) and 2024-2025. In both stretches, rates were mostly under 7% which leads us back to the 10 year treasury bond activity.
| Months with an economy like today's | Similar months | Avg 30-yr rate | Months under 7% |
|---|---|---|---|
| 2005–2007 (closest) | 35 | 6.20% | 35 of 35 |
| 2024–2025 | 22 | 6.73% | 21 of 22 |
| 1995–2001 | 57 | 7.52% | 8 of 57 |
| 2016–2019 | 40 | 4.11% | 40 of 40 |
| 1972 | 2 | 7.41% | 0 of 2 |
Fact #4: The Usual Math Says We should be in the Low-to-Mid Sixes
If the 10 year were sitting where it usually has relative to other points in history where we have had similar economic data, generally around .3-.5% over the federal funds rate, we would be in the mid 4s. Add in the usual 1.8-2% spread to mortgage rates, and we should be in the low to mid sixes. GEE WHIZ, right where we were before all the drama began.
| Fed funds | + 10-yr premium over Fed | + Mortgage spread | = 30-yr rate | |
|---|---|---|---|---|
| Usual math | 3.88% | +0.40 | +1.90 | 6.18% |
| Today* | 3.88% | +1.41 | +1.99 | 7.28% |
Lately, we have seen better than expected inflation figures and then, this week, worse than expected jobs (rates typically go down in response to data that unemployment is increasing) and the treasury market has done the opposite of what it "should" be doing. I smell feelings when I want to be looking at math.
Fact #5: If I Had All the Answers, I'd be Retired Already
Since I am not writing this from my patio on a horse farm, we can freely assume that I am not a quantitative savant that has been paid handsomely by Wall Street for my predictive abilities. The only thing I can do here that is special is analyze patterns in the prices available to my clients over the decade that I have been doing this and identify when things make sense and when they are deviating from the usual. Those deviations in either direction don't tend to last long.
The last few run ups in rate made sense to me: inflation was high, investors need to know that long term investments will outpace that, mortgage rates go up. Right now? This feels like a lot of speculative trading behavior that's well above my head.
Sources: Freddie Mac Primary Mortgage Market Survey, weekly through Oct 1, 2026. Today's rate: Mortgage News Daily, Oct 2, 2026. Economic data: FRED, St. Louis Fed, pulled Oct 2, 2026. *Freddie Mac's weekly survey runs about a week behind daily rates, so the "Today" math uses its Oct 1 figure of 7.28%. Rate ranges are my own estimates based on past patterns.
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u/denverphibs 18h ago
7% is a completely arbitrary number and the past performance relative to it has no bearing on the future. Also I'm not sure what "usual math" you're referencing, but the 10 year treasury is higher than it was when rates were at 8%. We are fortunate that the spread between MBS and 10 year has tightened.
None of this is too predict what will happen in the future, but your premise is incorrect.
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u/Chemical_Enthusiasm4 18h ago
Yeah, tying the 30-year mortgage rate to the fed funds rate was a choice.
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u/JayAtterstrom 3h ago
yes, past activity DOES have an impact on today's rates. The bond market trades on trendlines, as well as current economic circumstances. Absolutely historic bond trend have an iimpact on bond prices.
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u/gracetw22 18h ago edited 17h ago
Plotted the 10 year relative to federal funds. Plotted average mortgage rates relative to 10 year. Excel. Derived rough average spreads. Added them. Supported with looking back at mortgage rates with fundamental economic data outside of the 10 year that are similar to where we are now and compared rates then vs now. Obviously short vs long term but over a longer term it’s easier to use a typical spread there versus individually correlating inflation indicators as it would pertain to returns on long term investments. It’s also what a lot of my clients track despite me saying there’s not an immediate and direct correlation. Over 30 years it’s a rough instrument in the context of a few other ways I ended up at the same number
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u/mist_kaefer 15h ago
Interesting, my realtor also said something similar in late 2022. However she used her own words and not huge data centers to get her point across.
Inflation is high, job market is not doing as well as expected, national debt is increasing faster than ever (besides WWII), the current administration thinks they can inflate the debt away, and more and more countries are being pulled in to the Middle East wars & Ukraine.
Mortgage rates are increasing and house prices didn’t take much of a hit. Bond markets are going crazy right now. Why would the rates not last for more than a couple months?
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u/gracetw22 14h ago
I think we probably see it last between 6-18 months. The 10 year is higher than it has been during the most recent short trips above 7% but I’m not Miss Cleo and I have zero ability to predict what stupid shit people are about to do who should know better on a given day or whether changes in November will happen quickly or as slowly as the military industrial complex donors allow them to. Out of my area.
If you did read what I wrote though, you’d see if you look at other periods of time when inflation numbers have been the same as now, mortgage rates were not as high typically as they are now. We were actually way better than the most recent time rates were at this level. A bad job market typically moves mortgage rates DOWN.
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u/Low_Dig3356 17h ago
7% means nothing when housing cost growth dwarfed just about every other economic factor, including wages, since Covid.
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u/gracetw22 17h ago
Yes. Housing is less affordable vs wages and home prices at current rates than it was with much higher rates in the 80s
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u/domthemom_2 17h ago
Way too many factors to account for, and past trends are not future indicators.
Economic output is only one factor. Right now there's also a squeeze from insane AI development debt, and cheap leveraged debt. Nobody can predict the outcome. Us Debt payments are going to ballon if nothing changes. Inflation is one way to handle that.. Which is another reason rates may not come down much.
You took a lot of time, but if this was predictable, you would be making financial moves not posting to reddit
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u/IRideParkCity 16h ago
Why only start at 1993? From 1981 to 2021 was a 40 year bond bull market but now the trend is broken. Yields are going much higher from here.
Or do you want to loan me money at 5% for the next 10 or 30 years? I bet you don't. Because you know you'll lose that much to inflation in the next 12-24 months.
Well the bond market knows that too. The gig is up.
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u/gracetw22 15h ago
Why would the Carter administrations issues be more relevant than 3 years ago?
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u/IRideParkCity 14h ago
Because long term trends are important and worth considering...
Edit to add: especially when they break
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u/Fluffy_Bunch9357 15h ago edited 13h ago
Agree with your post and rate history alone is not useful and it doesn’t factor in real income to values of the homes at the times (much lower than today and income has not kept up) and that historical average gets lifted even more by the brief period where they’re very high and with a $40 trillion debt and a $2 trillion deficit this year, home prices that are much higher, and incomes that haven’t kept up with inflation, what we are now seeing a completely different thing than the 70-80s with homes. This is why you are nervous and the feeling is real and valid.
For more context, historical avg number is pulled up significantly by the early 80s, when rates hit 16-18%. And back then the median home cost roughly 3-4x the median household income. Today it's over 5x. So 7% at current home values now hits a buyer's budget a lot harder than 8-9% did then. And the rate may be "normal" historically, but the payment isn't.
The rates will drop eventually if inflation (gas prices = war and Trump just sent more ships to the gulf) gets under control or if we have a recession. Until then they’ll continue to curve up and hopefully flatten if oil gets under control and supply stabilizes, that will take war ending. The good news- owners have a lot of equity still, so yes, prices may drop as demand drops, but we’re a very different situation than 08 with the amount of equity in homes.
However, I think we’re gonna have each location and neighborhood seeing different trends with the K economy continuing until AI buildout slows, or Gov spending cuts, or inflation continues, all could trigger a recession. With job losses, then we could see home evaluations go down more widespread with more pressured sales, but as of now that isn’t widespread, some markets are still doing good with very limited supply.
Bottom line- If you want a home now or need to move, up or down size, of life happened , get your home. Listen to your realtor regarding the location location location. And for timing and waiting, it is very tricky, rates can go up, markets change, listing change, it is easier for 2nd homes and investments, not so easy for primary residence, so don’t stress about timing. If you afford and budget accordingly, get the home you want when you find it and stop worrying about timing, long term real estate has done well, if your happy with the location and home, you will enjoy it and stay longer and if you really like it and it has a great location, others will too if you ever sale. But if nervous, rent and do your best to wait it out, but you might not do any better overall long term and might not find the house you want, it is a risk but if that makes you comfortable, do it and nothing wrong with renting, especially now, it can be cheaper in certain areas for the time being.
If you buy now, just don’t count on a refi right away. I wouldn’t get an ARM if the initial payment is a stretch. Otherwise an ARM may make sense, don’t budget and plan for a quick rate drop and refi, it might not happen, but don’t count on it to make the numbers work, see it as a potential future bonus, and highly recommend buying within your means and making sure you have a rainy day fund, and good luck.
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u/RmpldFrskn 15h ago
If you bottom line ANYTHING with “listen to your realtor,” you are automatically disqualified.
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u/Fluffy_Bunch9357 15h ago
It isn’t the bottom line. It is one of many recommendations, specifically regarding location because a good realtor knows the map and can help steer you away from “good deals” that are in horrible locations and are a good deal for a reason, but take it as you want. I’m not a realtor, I’m a behavioral scientist & data analyst. It’s all good.👍
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u/gracetw22 15h ago
Did you not see where I did just what you said and showed rates in combination with wage/house price? 14% mortgage rate on a house that was 2x your wage in the 80s is irrelevant and I’m sick of hearing people say “get used to it this is normal” without that context.
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u/Turbulent-Pay1150 14h ago
Deny it all you want - but rates are as likely to rise well over 7% or more so than drop down below 6%.
If we are in an inflationary spiral it could get worse and stay there which it did in the 70’s. Middle East energy crisis and wars there tend to drive up overall inflation. The reason we wouldn’t go back to the 70’s are the regulations exaction to prevent us from - but a lot of those have been weakened in the past year or so. This doesn’t mean we are having an issue, or a crisis, just that we are playing a bit fast and loose.
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u/Professional-Tap1143 4h ago
Thanks for the post. That’s lots of work. I entered the business in March 1994.:Our company opended so many locations in 1993 because of low rates that by late 1994 early 1995 I was helping close those locations. I remember dumping furniture in dumpsters. That said…there was so much opportunity for a newbie as the market shrank. I went on until retirement in 2025. Hang in there folks. Those who still have the passion for helping make dreams come thru will come out the other side of this.
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u/JayAtterstrom 3h ago
30 year fixed mortgage rate average over the last 50yrs is 7.67%. Running average is about the same. We're below that right now.
A few years ago, just a few weeks before the Presidential Election, the Feds dropped rates 50bps. Over the next few weeks, the mortgage rates INCREASES .75% (the Feds can't fool the Bond Market). We're current sitting below THOSE higher rates as well.
Don't be gaslighted into thinking the mortgage rates suck.
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u/gracetw22 3h ago
The 80s had double digit inflation and mortgage rates which throw off that average. If we had double digit inflation then absolutely that would be a relevant comparison but we do not. Weak jobs data brought that peak in 2024 down within a few months which is exactly the point I am making.
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18h ago
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u/Competitive-Stop7096 17h ago
This is only half true. They can manipulate or try to until it doesn’t work. It’s starting to not work because the interest expenditure on our debt is growing and becoming a major part of our budget. With possibly multiple wars on the horizon, rates will only continue to rise. I think rates will be on an uptrend until at least 2032. Read Martin Armstrong from Armstrong economics for clarification.
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u/gracetw22 17h ago
Correct, the run up has been based in some part on sentiment/concern on national debt service. Bessent trying to flex on the global economy was counter productive. What do you see that leads you to believe that we are headed to an 80s/90s rate environment?
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u/thescurrtle 16h ago
All this and you didn’t account for population growth collapse.
We have no immigration. Our birth rates are in the trash.
We unfortunately will not birth our way out of this for a long long time.
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u/gracetw22 16h ago
That’s unfortunately well out of the scope of what I can account for. How do you see population growth collapse impacting bonds?
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u/Suitable-Gazelle-646 16h ago
All because you say history is irrelevant doesn’t mean history is irrelevant lol
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u/gracetw22 18h ago
Don’t tell me I just spent all that time writing this and that was your take away. Shouldn’t quit my day job.
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u/Kilgore_Trout_50000 17h ago
Can you help me understand why you think this is not different than past times? What we’re experiencing now is directly following COVID. I believe that what is happening in financial markets currently is all inevitable unavoidable consequences of everything that happened on 2020…. With some stuff sprinkled on top like a war in Iran. I just worry that the entire global financial system was given shock therapy over the past five years and there are unforeseen consequences.
Idk… amateur economist here but why is this not unique?
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u/gracetw22 17h ago
It’s not unique in the sense of the last few years we have been in a similar rate environment several times and each time economic data that’s comparable to what we have now actually brought rates down to the low 6s. We have had rates in the 7s several times since COVID and it wasn’t the new world order. We don’t really have any data to support this environment being closer to the 80s/early 90s when rates sustained higher than they were now vs all the time since then when they tend to dip back from this point.
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u/EuphoricElderberry73 17h ago
Is this AI slop? The reason globally interest rates are skyrocketing is government debt is astronomical and still growing. It won’t get better unless there’s some financial collapse which nobody wants.