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Pandemic Deals Are Over—Home-Loan Rates Headed For 4%-Plus

As the mortgage-rate roller coaster heads uphill, the record-low home-loan deals in the upper 2%-range that kept the housing market pumping over the past two years are a distant memory.

On February 10th, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed home loans hit 3.69%, up from 3.55% a week earlier. A year ago, the popular 30-year fixed mortgage averaged 2.73%.

“The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic,” noted Sam Khater, Freddie Mac’s chief economist. “Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on home-buyer demand.”

Rates on 15-year fixed-rate mortgage averaged 2.93% on February 10th, up from 2.77% a week earlier. A year ago, 15-year fixed-rate loans averaged 2.19%.

On February 11th, the 10-year Treasury rate—the gauge economists use to forecast 30-year-fixed mortgage interest charges—rose to 2.04% from 1.93%.

This means that benchmark 4%-plus mortgage rates are on the near horizon.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home-purchase loans for borrowers who place a 20% down payment and has excellent credit.

While mortgage rates floated near—or below—the 3% bargain range for most of 2021, thousands of Chicago-area homeowners refinanced their loans. Those who sat on the dock missed the boat.

To rein in inflation, which ran at a 7.5% clip in 2021—the highest level in four decades—the Federal Reserve Board said in mid-December it plans to shift from a relaxed monetary policy that has supported the economic rebound from the 2020 pandemic recession toward a tighter policy.

Earlier, the National Association of Home Builders forecast that the federal-funds target rate will likely undergo three 25-basis-point interest hikes in 2022, and three more similar increases in 2023. However, some economists now are predicting a 50-basis-point Fed rate hike in March.

An earlier forecast by the Mortgage Bankers Association projected 30-year fixed home-loan rates rising to 4% by the end of 2022.

Now it looks as if the 4%-level could be reached in March. If the Fed hikes its rates three more times in 2022, mortgage rates could easily rise to 4.5% or higher by the end of the year.

Thirty-year fixed-mortgage interest rates ended 2020 at a rock-bottom 2.66%—the lowest level in the Freddie Mac survey history, which began in 1971. Home-loan rates set new record lows for an amazing 16 times in 2020, and tens of thousands of homeowners refinanced.

However, Chicago-area borrowers who move quickly still have a chance to lock in the following bargain rates as of February 10th, reports

  • First Savings Bank of Hegewisch was quoting 3.087% on 30-year loans and 2.45% on 15-year mortgages with 20% down payment and a $615 loan fee.

  • Liberty Bank was quoting 3.361% on a 30-year loan and 2.625% on a 15-year mortgage with 20% down and a loan fee of $846.

  • Gateway Capital Mortgage in Chicago was quoting 3.4% on 30-year loans and 2.75% on 15-year mortgages with a 3% down payment and a $595 loan fee.

Mortgage-rate history

Archives of the now-defunct Federal Housing Finance Board show long-term mortgage rates in the 1960s were not much higher than the Great Depression, when lenders were charging 5% on five-year balloon loans.

Nearly six decades ago, between 1963 and 1965 you could get a mortgage at 5.81% to 5.94%. Between 1971 and 1977, the now-defunct Illinois Usury Law held rates in the 7.6%-to-9% range.

In the early 1980s, run-away inflation caused home-loan rates to skyrocket over the moon. According to Freddie Mac, benchmark 30-year mortgage rates peaked at a jaw-dropping 18.45% in October of 1981 during that Great Recession.

Rates finally fell below 10% in April of 1986, and then bounced in the 9%-to-10% range during the balance of the 1980s. More than 22 years ago—in August of 1999—when some of today’s Millennial borrowers were in diapers, lenders were quoting 8.15%.

Bitcoin mortgage launch.

Mortgage-tech has taken on a new star-trek launch. Starting on January 29th, borrowers now can buy a parcel of land and pay it with Bitcoin, a “non-fungible token” (NFT).

Terra Zero Technologies has issued a two-year, $45,000 land loan, one of the first mortgages in the Metaverse—a network of virtual worlds where user can interact and borrow money.

The plot of land is located in “Decentraland,” a Metaverse with about 92,000 listed parcels. The down payment and interest rate on the loan were not disclosed.

The deed to the land is an NFT. Until the loan is paid off, the lender escrows the Bitcoin. Developers, on the other hand, are given land rights, allowing them to build whatever they want on the parcel. If the borrower does not pay off the obligation, the lender keeps the Bitcoin.


For more housing news, visit Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit


“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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