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30-year fixed averaged 10.19% — falling rates
10.19%
Annual avg rate
30-yr fixed
-2.24pp
vs 1985
Year-over-year
6.80%
Fed funds rate
Annual avg
+1.86%
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 6.80% during 1986. Monetary policy was calibrated to balance growth and inflation objectives.
Consumer price inflation was 1.86% in 1986. Inflation was within or near the Federal Reserve's long-run target range.
With elevated mortgage rates averaging 10.19%, housing affordability was tight by modern standards. Declining rates spurred refinancing activity and supported home purchases.
$2,675/mo
At 1986 rate (10.19%)
Principal + interest only
$1,964/mo
At current rate (6.84%)
Principal + interest only
$711/mo
1986 was more expensive
vs today on same loan