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30-year fixed averaged 12.43% — falling rates
12.43%
Annual avg rate
30-yr fixed
-1.45pp
vs 1984
Year-over-year
8.10%
Fed funds rate
Annual avg
+3.56%
CPI inflation
Year-over-year
Estimated monthly rates based on annual averages and adjacent-year interpolation. Seasonal pattern reflects typical mortgage market spring/summer premium.
The Federal Reserve maintained a federal funds rate averaging 8.10% during 1985. The Fed maintained a restrictive monetary policy stance.
Consumer price inflation was 3.56% in 1985. Inflation was within or near the Federal Reserve's long-run target range.
With extremely elevated mortgage rates averaging 12.43%, housing affordability was severely constrained. Declining rates spurred refinancing activity and supported home purchases.
$3,185/mo
At 1985 rate (12.43%)
Principal + interest only
$1,964/mo
At current rate (6.84%)
Principal + interest only
$1,222/mo
1985 was more expensive
vs today on same loan