Mortgage rates dipped in the past week, ending a seven-week upswing that ranks among the past half-century’s longest hikes.
Mortgage buyer Freddie Mac says its widely-watched 30-year loan rate dipped to an average 3.13% this week from 3.18% last week. The previous seven weeks of hikes pushed rates up 0.45 percentage points from 2.73% on Feb. 11. It’s part of a bounce up from a record low 2.65% set Jan. 7.
My trusty spreadsheet, reviewing weekly data back to 1971, put the seven-week spike into some eye-catching historical context. Overall, this ties for the 12th-longest upswing in 50 years. Translation: Surges like this or longer have happened less than 1% of the time.
Of course, history tells us the 2021 bump was nowhere near the most-extended upswings from the wild, inflationary battles of the 1970s and 1980s.
A soaring cost of living typically unnerves bond traders, who help set interest rates. So they’ll demand higher rates to protect their investments from inflation’s knack of slashing buying power. And the Federal Reserve, when it was hoping to end that era’s widespread inflation-induced economic pain, forced rates even higher to cool the business climate.
The two lengthiest rate-hike streaks ran 15-weeks long.
The first was through September 1973, as rates rose to 8.85% from 7.73%. This was tied to an Arab oil embargo that superheated inflation. The other one, through November 1980, pushed rates to 14.28% from 12.25% — came as the Fed slashed money supply to chill inflation.
Next on this ranking was a 14-week upswing through September 1974 — rates went to 10.03% from 9.07% as inflation stayed hot and a 13-week surge ended July 1984, dropping to 14.68% from 13.58% — near the end of the Fed’s inflation battle.
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Other long streaks were seen inflation got another energy jolt from the Middle East in the late 1970s. One surge ran 10 weeks ending June 1979 — to 11.10% from 10.48% — and another was nine weeks long through May 1978 — to 9.68% from 9.23%.
Nine-week boosts were tied to last decade’s booming economy: One was through December 2016 — as rates jumped to 4.32% from 3.47%. The other, through March 2018, pushed mortgages to the current recent peak of 4.46% from 3.95%.
Four times we’ve had eight-week rate upticks including one that ended abruptly in October 1987 — pushing rates to 11.58% from 10.30%. It ended …
Source:: East Bay – Entertainment