Loading CalcVerseAI...
Russian default and LTCM crisis drive rates to 25-year low
6.94%
Annual avg rate
30-yr fixed
-0.66pp
vs 1997
Year-over-year
5.35%
Fed funds rate
Annual avg
+1.55%
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 cut rates three times (75 bps total) in response to the Russian sovereign default and the collapse of Long-Term Capital Management hedge fund. Greenspan feared global contagion could trigger a financial crisis.
CPI fell to 1.6% — the lowest since 1964. Oil prices collapsed to $10/barrel. Asian currency crisis and global deflation pressures kept US inflation at bay.
Mortgage rates fell to 6.94% — the lowest in 25 years. A massive refinancing wave began. Housing starts rose to 1.6 million units. The "refi boom" boosted consumer spending and economic growth.
$1,984/mo
At 1998 rate (6.94%)
Principal + interest only
$1,964/mo
At current rate (6.84%)
Principal + interest only
$20/mo
1998 was more expensive
vs today on same loan