I was prompted to write on this topic by an article posted on Mortgage Professional’s America Magazine or MPAMag.com . Borrowers these days have a very disillusioned view of what “normal” interest rate ranges should be. Ask a Baby Boomer what interest rates were like in the late 1980’s on For example a recent survey by Redfin polled homebuyers on what they thought “normal” interest rates looked like. The majority had expectations of a “normal” interest rate to be under 5%. Baby boomers are a generation that could certainly scoff at this survey result, as many boomers remember interest rates in the 1980’s in upwards of 8-9% for a 30-year mortgage. Because we are a private money, hard money lender, we often cite this same example when prospective borrowers complain about our interest rates being high. During the late 1980’s, private money interest rates could be seen as high as 10% per week!! With new usury laws imposed in some States since then to avoid such “loan sharking,” these types of interest rates are virtually non-existent these days. A typical private money interest rate these days can range anywhere from 7% to 15%.

As quoted from the MPA article,

“In the 1980s, rates bounced anywhere from the giddy heights of about 18% to around 10%, according to data from the Federal Reserve Bank of St. Louis – but they never even got within shouting distance of 5%.”

I think the message here is take advantage of cheap credit while it’s available and interest rates are low. Whether you’re getting a private money, real estate loan or a bank loan, I would say get money while you can.

Posted by Corey Curwick Dutton