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How Mortgage Rates Vary by State

You might think that mortgage rates are consistent throughout the country. After all, there’s a…

  • March 8, 2019

You might think that mortgage rates are consistent throughout the country. After all, there’s a high level of transparency in loan marketing these days, and many lenders do business across several – or many – states. However, there are differences in what a mortgage typically costs from one property market to the next.

Online loan marketplace LendingTree has released a report comparing mortgage rates by state.

Housing markets can vary significantly across the U.S., and so can mortgage terms.

A potential homebuyer in one state might be able to get approved for a loan more easily than someone with a similar income and credit profile who lives in another part of the country.

In order to better understand how housing markets differ among states, LendingTree analyzed multiple factors that are relevant to people looking to buy a home.

While the study primarily focuses on mortgage interest rates offered to LendingTree users in different states, it also looks at other aspects important to the homebuying process, like average APRs, loan-to-value ratios, home loan amounts and down payment amounts.

The study evaluates the spread between high and low APRs offered to LendingTree users in order to illustrate how shopping around for a mortgage can help a potential buyer save money.

Key findings

  • The average offered interest rate for the all 50 states is 4.84 percent. There is no state where rates fall below 4.74 percent or rise above 4.96 percent.
  • California, New Jersey, Washington and Massachusetts are the states with the lowest average interest rates. The average interest rate is 4.74 percent in California, 4.75 percent in New Jersey and 4.76 percent in both Washingtonand Massachusetts.
  • New York, Iowa and Arkansas are the states where average interest rates are the highest. The average interest rates in these states are 4.96 percent, 4.93 percent and 4.92 percent respectively.
  • The average down payment across all 50 states is nearly $28,000. The state with the lowest average down payment is West Virginia, where the average buyer will only need to pony up a little bit more than $15,000 for a down payment. On the flip side, buyers in New York will need nearly triple that, $43,404, to be able to afford the average down payment.
  • Across all 50 states, the average offered loan amount is $224,297. The highest average offered loan amount is over $313,000 in California, while it is only $186,502 in Oklahoma.

The average loan-to-value ratio of nearly 75 percent goes hand in hand with the average down payment and loan amounts offered throughout the country. The loan-to-value ratio represents how large the mortgage amount is compared with the appraisal price of the home.

A low LTV, like those commonly found in Hawaii or California, means that buyers are paying more out of pocket in order to be able to afford a home. Higher LTVs like those found in Kentucky or Kansas mean that buyers can get away with smaller down payments.

The average APR offered across the U.S. is 4.95 percent. California is the state with the lowest average APR of 4.83 percent, while New York is the highest with 5.07 percent.

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