The 30-year fixed-rate mortgage hit 6.70% this week, sending some prospective homebuyers into a frenzy, and others backing out of contracts in droves.
While the recent hikes are jarring, it’s actually nothing compared to rates back in the 1980s.
In September 1981, a 30-year fixed-rate mortgage was at a double-digit high of 19%. Connie Strait, who started her career in real estate in the ’80s, told CNN she remembers how “delighted” she was when closing her new home at a rate of 19%, fearing rates would rise to 20% the following week.
“Unfortunately, now people don’t remember how Baby Boomers were getting rates of 10%, 12% and higher for most of the 1980s,” Strait told CNN. “Meanwhile, our kids are shocked by 6%.”
Related: Mortgage Rates Are Above 6 Percent For The First Time Since 2008
However, given factors like inflation and skyrocketing home prices, buying a home is still more expensive for many prospective buyers today than it was 40 years ago, despite mortgage rates being significantly lower.
In October 1981, the average home cost $70,398. Today, it’s $434,978.
To make matters worse, rising home prices have significantly outpaced changes in income. In the past five years, average home prices have risen by 60%, while income has only increased by 15%, according to CNN.
So while mortgage rates are looking slim compared to the 1981 highs, the current economic conditions have made homebuying farther out of reach than four decades ago.
Related: The Real-Estate Game Is Changing Fast. Are You Ready to Win?