A map of the United States

The state of mortgage rates depends on which state you're in 

A new survey of lenders reveals a 38 basis point difference between mortgage rates by state, which can mean hundreds of dollars a year for borrowers.

June 11, 2024
2 minutes

Key points:

  • Hawaii has some of the lowest rates, and Vermont has some of the highest.
  • The variability can be caused by factors such as the number of lenders, how much potential buyers shop around and regulation.
  • What will it take to see 3% rates again? “A catastrophic economic event.”

The thing about this challenging mortgage environment is that we're in it together, experiencing the same ups, ups, ups and all too infrequent downs.

Right? Well … 

It turns out that like the weather, there is significant variability between mortgage rates by state, according to data provided to Marketwatch by Curinos, a financial-services focused consulting company.

The company found differences of up to 38 basis points, which plays out as a mortgage that is 6.62% versus 7.0%. On a 30-year, $500,000 mortgage, a 38-point reduction would save a homebuyer around $127 per month.

"Not all markets are created equal," Rich Martin, director of real estate lending at Curinos, told MarketWatch. Curinos learned this by surveying 100 lenders about their rates on 30-year mortgages, and another 40 on their rates for second mortgages.

The states with the highest rates? Vermont, Michigan and Delaware.

And the lowest? Hawaii, North Dakota and Nevada.

But why? Experts offered these potential reasons:

  • Credit-worthiness: Some states may have a higher concentration of buyers with great credit, which would drive overall rates down (and have the opposite effect if buyers have less than great credit).

  • Shopping around: Buyers who do more hunting for great rates tend to get them. 

  • Competition: Rates tend to be lower when more lenders are competing for the same potential mortgage holders.

  • Regulation: States with more complex foreclosure processes tend to have higher rates. "The timeline is much longer, so the risk to the lender is greater," said Doug Duncan, chief economist at Fannie Mae.

What it would take to see 3% rates again

Speaking of timelines, Duncan also told Marketwatch that even with variability, mortgage rates are not at a place that could be considered extreme. For that, you'd have to go back to the '80s, when rates hit 18%.

So what would bring mortgage rates back in the realm of 2-3%, like we saw during the pandemic? Something bad. Very, very bad. "Unless there's some catastrophic economic event for the broader economy, we wouldn't expect to see mortgage rates back at 3% in our lifetimes."

Other economists agree, and believe the recent period of ultra-low rates wasn't actually good for the housing market, even if it was a boon for buyers at the time.

If it's any consolation, a 6% mortgage rate is "not unusual historically," Duncan said. It was common between 1950 and 2000. But houses cost a lot less then.

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