Mortgage interest rates in the U.S. Q1 2019- Q2 2022, by mortgage type

In the United States, interest rates for all mortgage types decreased in 2020. The rates, which are affected by the federal funds rate, were lowered to boost home sales and support the American economy. To tackle rising inflation, the Federal Reserve introduced a series of hikes of the base interest rate, which resulted in higher mortgage interest rates. As of the second quarter of 2022, the 30-year fixed rate reached 5.24 percent, up from three percent in the same quarter of 2021.

Why are U.S. home sales increasing?

Cheaper mortgages normally encourage consumers to buy homes, leading to the number of existing homes sold in the United States gradually increasing in recent years and surging in 2021. Nevertheless, the housing market has become increasingly unaffordable. Since 2011, the median price of an existing single-family home in the United States has increased by around 50 percent. Over the same period, median weekly earnings have increased by just 17 percent.

Comparing mortgage terms and rates

Between 2008 and 2021, the average rate on a 15-year fixed-rate mortgage in the United States stood between 2.28 and 4.83 percent. Over the same period, a 30-year mortgage term averaged a fixed-rate of between 3.08 and 6.03 percent. Rates on 15-year loan terms are lower to encourage a quicker repayment, which helps to improve a homeowner’s equity.