Strange coincidence. I recently noticed that both of these factors were almost exactly double what they were in January 1990.


Due to inflation lowering the value of the dollar over time, $1 in January 1990 was worth twice as much as $1 today (CPI-U).


Due to lower mortgage rates, with the same monthly mortgage payment, you can borrow twice as much money at today’s 3.2% rate than you can at 9.8%, the rate the first week of January 1990. (That’s for monthly principal and interest (P&I) payments on 30-year fixed-rate mortgages.)

Full-size graph on this page.


Let’s say in 1990 you bought a house for $100,000 with no money down and you got a $100,000 30-year fixed-rate mortgage at 9.8%.

Today, what could you buy for that same (real) monthly payment?

1) Adjust for Inflation: 1990 to 2020

A $100,000 mortgage at 9.8% interest in 1990 would be equivalent to a $200,000 mortgage at 9.8% in 2020.

2) Adjust for Interest Rates: 9.8% to 3.2%

A $200,000 mortgage at 9.8% in 2020 would have the same monthly mortgage payment as a $400,000 mortgage at 3.2% interest in 2020.


A $100,000 mortgage in 1990 at 9.8% interest would have the same real monthly mortgage payment (P&I) as a $400,000 mortgage in 2020 at 3.2% interest.

(Another conclusion is that lower mortgage rates eventually lead to higher house prices but that’s a topic for another day.)

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As part of this project, I took the Case-Shiller Home Price Index and adjusted it for inflation and mortgage interest rates like I talked about above. 

For more information about the “Real Monthly Mortgage Payment Price” project see here and here.

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