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Tech bubble burst; rates peak at 8% then fall
8.05%
Annual avg rate
30-yr fixed
+0.61pp
vs 1999
Year-over-year
6.24%
Fed funds rate
Annual avg
+3.38%
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 under Greenspan raised rates six times (175 bps total) to cool the overheating economy, reaching 6.5% by May. When the dot-com bubble burst in March and the economy slowed, the Fed paused but did not cut until January 2001.
CPI rose to 3.4% amid energy price spikes, tight labor markets, and tech-driven investment boom. The Fed worried inflation expectations would become unanchored.
Mortgage rates peaked at 8.5% in May — the highest since 1995 — before falling as the economy weakened. Housing remained resilient as demographics and low unemployment supported demand.
$2,212/mo
At 2000 rate (8.05%)
Principal + interest only
$1,964/mo
At current rate (6.84%)
Principal + interest only
$248/mo
2000 was more expensive
vs today on same loan