If you think rates are high now...

Answer: 18.45% (October, 1981); current 30-year mortgage average

is 7.04% as of 1/16/25

Questions:

• What impact do you think high interest rates on mortgages, like 18.45%, had on the housing market back in 1981?
• How do interest rates on mortgages rates today compare to 1981? What has been the trend in the past few months, according to the chart?
• The higher the interest rate on a mortgage loan, the __________, the monthly mortgage payment.
  

Here are the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (Rocket Mortgage):

October 1981 saw 30-year FRM mortgage rates hit their historical peak at 18.45%. That same year saw the highest annual average at 16.63%. The culprit? Record inflation caused by the OPEC embargo...By looking at all the historical mortgage rate data available from Freddie Mac, a trend becomes clear. With the exception of a spike in the 1980s, rates were getting lower every decade – until now. The average rate in 1971 was 7.54%. As of 2020, the average rate was 3.11%. Rates that low likely won’t be back for a while.

Now, interest rates sit between 6% and 7% and could potentially rise still further this year.

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Get your students out of their seats to experience inflation in a new way. Check out MOVE: Inflation over Time

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What does it feel like to be overwhelmed by debt? Arcade game, Cat Insanity, captures the negative emotions from that experience. 

About the Author

Dave Martin

Dave joins NGPF with 15 years of teaching experience in math and computer science. After joining the New York City Teaching Fellows program and earning a Master's degree in Education from Pace University, his teaching career has taken him to New York, New Jersey and a summer in the north of Ghana. Dave firmly believes that financial literacy is vital to creating well-rounded students that are prepared for a complex and highly competitive world. During what free time two young daughters will allow, Dave enjoys video games, Dungeons & Dragons, cooking, gardening, and taking naps.