Mortgage Payments: A Tale of Two Eras

In the ever-evolving landscape of homeownership, one constant remains: the monthly mortgage payment. But how have these payments changed over time, and what factors have contributed to their evolution? Let's take a journey through the decades to compare the costs of yesteryear with today's mortgage payments.



The 1970s and 1980s: A Time of High Rates and Rapid Change

In the 1970s and 1980s, mortgage rates were notoriously high, often exceeding 10% and even reaching staggering heights of 18% during the early 1980s. These sky-high rates significantly impacted affordability, making it more challenging for many to secure a mortgage. However, during this period, home prices were relatively low, with the median home sale price averaging around $25,000 in 1971, or about $195,000 in inflation-adjusted dollars in 2024.

The 1990s and 2000s: A Period of Stability and Growth

As we entered the 1990s and 2000s, mortgage rates began to stabilize, with the average 30-year fixed-rate mortgage hovering around 7% to 8% for much of the decade. Home prices, however, continued to rise, with the median home sale price reaching $238,450 in 2001, in inflation-adjusted dollars. This combination of relatively stable mortgage rates and increasing home prices led to a steady rise in monthly mortgage payments.



The 2010s and 2020s: A New Era of Low Rates and Rapid Appreciation

The 2010s and 2020s brought about a new era of low mortgage rates, with the average 30-year fixed-rate mortgage dipping below 4% in 2011 and reaching an all-time low of 2.65% in 2021. However, home prices soared during this period, with the median home sale price reaching $418,950 in 2024. This rapid appreciation, coupled with low mortgage rates, led to a significant increase in monthly mortgage payments.

The Impact of Income and Inflation

While mortgage rates and home prices have fluctuated over the years, one constant remains: the impact of income and inflation on affordability. In 1971, the median household income was around $10,300 annually, compared to roughly $80,600 in 2023. However, the rise in home prices and mortgage payments has outpaced income growth, making it more challenging for buyers to afford homes.



The Role of Property Taxes and Homeowners Insurance

In addition to mortgage payments, property taxes and homeowners insurance costs have also evolved over time, impacting overall housing affordability. From 2019 to 2024, property taxes went up by 27 percent on average, according to CoreLogic. In some states, the increase has been much higher, with tax bills in Colorado and Georgia rising by more than 50 percent in the last five years. Homeowners insurance costs have also increased, with the national average homeowners insurance cost reaching $2,181 annually for a policy with a $300,000 dwelling limit in 2024, up 11 percent from June 2022.

In conclusion, the history of monthly mortgage payments is a tale of two eras: a time of high rates and rapid change, followed by a period of stability and growth. As we enter a new era of low rates and rapid appreciation, it's essential to consider the impact of income, inflation, property taxes, and homeowners insurance costs on overall housing affordability. By understanding the evolution of mortgage payments, we can better navigate the ever-changing landscape of homeownership and make informed decisions about our financial futures.