Interest Rates, how long can a trend continue

FHA interest ratesIf you’ve heard anyone speak on the topic of interest rates for the past year or so you may have heard the phrase “all time low” here and there. The fact is we have experienced several all time lows for a couple of years which have helped the housing market regain it’s footing since its collapse in the late 2000s.

As it stands today a home buyer can secure an FHA loan at the current 3.25%. That is simply amazing when you look at the chart below which reflects the average interest rate for an FHA 30 year fixed mortgage for any given year since 1992.

In 1992 the average rate was 7.85% which transalates into a $1,447 principle and interest payment based on a $200,000 loan.

Comparatively if we were to borrow the same $200,000 today, we can expect a $870 principle and interest payment.

That’s a $577 diferrence every single month for 30 years which adds up to an extra $207,720 over the life of the loan. Ouch!

Looking at this chart we see a steady decline in interest rates over the past 20 years which begs the question, how long can the trend last? If you ask most economists, the answer is not very much longer. Most insiders are forecasting modest increases in the interest rate for most of 2013 and beyond.

The Bottom Line

Although we may not see interest rates jump to 7.85% anytime soon, any increase means a higher payment which can add up to a hefty sum over the course of 30 years but can also mean the difference between being able to afford that perfect home or being priced out of it.

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About Daniel Di Matteo

Realtor at CENTURY 21 Award, Daniel was Voted U-T San Diego’s Best Real Estate Agent in 2014. A Husband, Father, and most recently, accomplished Blog writer, which explains your visit today.


  1. Hey There. I’ve heard interest rates have already been moving up. Is that true?