The residential mortgage as we know it today is less than a century old. In fact, until the Federal Housing Administration (FHA) was established in 1934, only one in 10 Americans even owned a home. That all changed with the introduction of the 30-year fixed-rate mortgage during the Great Depression, which made homeownership possible for millions. Recent changes in mortgage rates have put a strain on the housing market. Historically low rates at the start of the 2020s led to a surge in home prices, and rates have stayed consistently between 6% and 7% since the Federal Reserve raised rates in 2022. However, home prices remain high. This combination of climbing prices with higher-than-recent rates has made housing affordability a major problem.

 

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