Will mortgage rates trends repeat the second half of the 1970s?

[Jesse Ottesen]

In the Oct 20, 2023 BP Money Show, Mindy and Scott did a good job of warning listeners about relying on predictions of mortgage rates dropping back down anytime soon. I don't think they took it far enough.  In 1974 my parents bought their first house with a 4% mortgage.  That was the same year when a 60%/40% stock/bond portfolio would have yielded you a -17% return. Very similar to 2022 with 4% mortgages and a -16% return on the 60/40 portfolio.  As the Fed tried to curb inflation in the second half of the 70s, mortgage rates rose from 4% to 21% in 1981.  It took nearly 40 years for rates to come back down.  I purchased my first home in 1990 with a 12.875% mortgage which I refinanced as rates continued to fall twice over the next 10 years.  I agree completely with Mindy and Scott to not get in over their head.  But, if you find a property that you want to buy and you can afford, historically any single digit mortgage is a good deal!