Lowest Mortgage Rates Across U.S. States - July 22, 2025
Mortgage Rates: A State-by-State Breakdown
Navigating the mortgage market can be a daunting task, but understanding the factors that influence mortgage rates can empower informed decisions. Here's a look at the key factors that determine mortgage rates and how they vary across states.
Shopping Around for the Best Deal
Always shop around for mortgage rates to ensure you're getting the best deal possible. The national average for a 15-year fixed rate is 5.86%, while the average for a 30-year fixed rate stands at 6.84%. However, these figures can differ significantly depending on where you live.
State-Specific Factors
The variation in mortgage rates by state is primarily influenced by several factors. These include lender presence, state-specific regulations, average credit scores, and average loan sizes within each state. Not all lenders operate nationwide; states with more lender competition usually have lower rates as lenders compete for business.
Different lenders also apply their own risk assessment strategies, which can impact rates offered locally. States with higher average credit scores generally see slightly lower mortgage rates because lenders perceive less risk from borrowers there. Additionally, states where larger loan amounts are common (often due to higher home prices) might experience different rates as lenders adjust for the perceived risk associated with bigger loans.
State-specific mortgage regulations also play a role by indirectly affecting the cost structure and lending practices, which can influence rates. For instance, rules about interest rates and foreclosure processes can add a layer of regulatory-related fees.
Personal Factors
Beyond state-specific factors, personal factors such as a borrower's credit score, down payment size, loan type, loan term, and broader national economic factors like Federal Reserve policies, inflation expectations, and bond market movements also affect mortgage rates. However, these factors mostly influence rates nationally rather than causing variation between states.
Strategies for Securing a Good Rate
If you're in the market for a mortgage, check your credit, save for a down payment, shop around, and get pre-approved. A higher credit score typically results in a lower interest rate, and a larger down payment reduces the lender's risk.
Moreover, understanding all the costs that make up your monthly mortgage payment, including principal and interest, property taxes, homeowners insurance, and private mortgage insurance (if your down payment is less than 20%), is crucial. Different loan types come with varying rates and requirements. Investing in turnkey real estate can help secure consistent returns with fluctuating mortgage rates.
Current Market Trends
In late 2024, the Fed cut rates three times, reducing the federal funds rate by 1 percentage point. The Fed anticipates a gradual easing cycle, with rates settling near 2.25%-2.5% by 2027. The Fed Chair, Jerome Powell, expects "meaningful" inflation from tariffs, but views this as a temporary shock.
The Fed's June 2025 meeting reaffirmed plans for two rate cuts in 2025. The "dot plot" shows a median projection of the federal funds rate falling to 3.9% by year-end 2025. The 10-year Treasury yields closely influence mortgage rates, and the national average for a Jumbo 30-year fixed rate is 6.79%, while the national average for a 5/6 ARM is 7.38%.
State Rankings
The states offering the lowest 30-year fixed mortgage rates for new purchases are New York, California, Florida, Washington, North Carolina, and Pennsylvania. Conversely, West Virginia, Alaska, New Mexico, Kansas, North Dakota, Oklahoma, Rhode Island, South Dakota, Washington, D.C., and Wyoming have the highest 30-year fixed mortgage rates for new purchases.
In summary, the key reasons mortgage rates vary by state are how local lender competition, regulations, borrower creditworthiness averages, and typical loan amounts differ geographically, leading to differing risk assessments and pricing by lenders.
- Informed decisions about mortgage rates can be made by shopping around for the best deals, as national averages can vary significantly depending on the state.
- States with more lender competition often have lower mortgage rates because lenders compete for business.
- States with higher average credit scores can see slightly lower mortgage rates as lenders perceive less risk from borrowers.
- Understanding state-specific regulations and how they indirectly affect cost structures and lending practices is crucial when considering mortgage rates.
- Personal factors, such as a borrower's credit score, down payment size, loan type, loan term, and broader national economic factors, affect mortgage rates, but they mostly influence rates nationally rather than causing variation between states.
- To secure a good mortgage rate, it is recommended to check your credit, save for a down payment, shop around, get pre-approved, and understand all costs that make up your monthly mortgage payment.
- Investing in turnkey real estate can help secure consistent returns with fluctuating mortgage rates, providing an interesting aspect to consider for your investment portfolio within the real-estate market.
