Although the Federal Reserve approved another jumbo rate hike, mortgage rates dropped below 7% this week. According to Freddie Mac, the 30-year fixed mortgage rate fell to 6.95% from 7.08% the previous week. It seems that rates have already priced in some of the effects of the Fed's higher interest rates. Investors usually react based on their expectations and don't wait until the day the Fed actually makes its move. It is also promising that this was likely the last rate hike of this magnitude, as indicated by the Fed.
A return to the sky-high interest rates of the 1980s isn't likely in today's economy, but let's compare the monthly mortgage payment now with the payment of 40 years ago in today's money. In real terms, after adjusting the median home price for inflation, the monthly mortgage payment was about $450 higher in 1982 than it is now. If mortgage rates were currently 9%, the monthly mortgage payment would be comparable to 1982 rates. Thus, in real values, current buyers pay less for their home purchase than buyers who purchased their home 40 years ago, although home prices are significantly higher now.