With mortgage rates recently dipping slightly below 6%, many buyers are asking the same question: is that actually a good rate?
The answer depends entirely on perspective. Compared to just a few years ago, anything above 5% can feel high. But historically speaking, today’s rates are far more reasonable than many headlines — and group chats — might suggest. The real story isn’t just where rates sit. It’s how much they matter in today’s housing market compared to the past.
To understand that, it helps to rewind.
In the early 1980s, mortgage rates reached levels that feel almost unthinkable today. By 1981, the average 30-year mortgage rate climbed near 18% as the Federal Reserve fought runaway inflation. Borrowing costs were steep, but home prices were dramatically lower. The median U.S. home price sat under $70,000, meaning even sky-high interest rates were applied to loan amounts that look modest by today’s standards.
Through the 1990s and early 2000s, mortgage rates settled into what was widely considered a normal range. Rates between 6% and 8% were common, and buyers moved forward without much hesitation. For many homeowners who purchased during those years, a 7% mortgage wasn’t viewed as a setback — it was simply the market. Housing remained attainable, and steady wage growth helped support affordability.
Then came the outlier.
During the pandemic-era housing boom of 2020 and 2021, mortgage rates fell below 3% — a historic low that helped ignite one of the most competitive real estate markets in modern history. Central Oregon experienced that surge in dramatic fashion. In 2021, homes sold for an average of 101.6% of their original list price, and properties moved in just five days on the market on average for the entire year. It was a once-in-a-generation environment that reset expectations almost overnight.
Today’s rates hovering around 6% are far closer to long-term historical norms than to the extraordinary lows of just a few years ago. But there’s one major difference between now and past decades: home prices.
While mortgage rates today are significantly lower than they were in the early 1980s, home values have risen exponentially. A 1% change in interest rate now affects a much larger loan amount than it did when homes cost a fraction of today’s prices. On a $500,000 mortgage, even a modest rate shift can dramatically change monthly payments and overall affordability. That’s why interest rates feel so important right now. It’s not just the percentage — it’s the price of the asset being financed.
The current market is less about historically high rates and more about recalibrating after an unusually low-rate era. The frenzy of 2021 was fueled by unprecedented borrowing costs, and conditions like that were never built to last.
The reality is that today’s mortgage rates aren’t historically high — but in a world of higher home prices, they’ve never mattered more. When looking to buy a home, make sure you’re working with a real estate advisor who can provide the information and guidance you need to reach your personal goals.
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