The economic and financial history of the 1970s and 1980s are characterized by volatile and rapidly increasing mortgage rates. This period was marked by unprecedented and rapid inflation, leading to an average nationwide mortgage rate of around 10%. This significantly cut into the housing market and real estate investors were especially hard hit.
The Federal Reserve is still haunted by this experience and it has taken extreme measures ever since to prevent a similar situation from occurring. The Fed has employed a number of strategies to steady mortgage rates, including raising the interest rates, intervening in the mortgage market and issuing loans for homeowners with poor credit ratings.
Most importantly, the Federal Reserve has maintained a remarkably low rate of inflation since the 1980s, keeping mortgage rates steady and providing the foundation for the relatively stable housing market we enjoy today.
• Unprecedented inflation in the 1970s-80s: Rapidly increasing mortgage rates, average mortgage rate of around 10%.
• Federal Reserve has taken preventative measures to steady mortgage rates: Raising interest rates, intervening in mortgage market, loans for poor credit ratings.
• Low inflation rate since 1980s: Keeping mortgage rates steady, providing stable housing market.
You can read this full article at: https://www.housingwire.com/articles/cpi-report-is-good-news-for-mortgage-rates/(subscription required)
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