🗺️ Why Mortgage Rates Vary by State

Written By Jennifer Patel

📊 What Goes Into a Mortgage Rate?

While national headlines talk about “average” mortgage rates, what you get depends on a mix of economic indicators and borrower risk. Here’s what drives rates:

  • Benchmark rates: Most lenders track the 10-year Treasury yield as a base.

  • Credit score & debt-to-income ratio: The better your profile, the better your rate.

  • Loan terms & type: FHA, VA, jumbo, and conventional all price differently.

  • Lender margins: Individual lenders add in their own profit margins, overhead, and risk buffer.

  • Market demand: Mortgage-backed security investors help steer daily rate shifts.

These factors explain why two buyers in the same week—but different zip codes—may see different offers for the same type of loan.

🌎 Why Do Rates Vary by State?

Today’s 🔗 Investopedia’s Zillow data shows:

  • Lowest averages (≈ 6.69% – 6.85%)

    • States like New York, California, New Jersey, North Carolina, Minnesota, Pennsylvania

  • Highest averages (≈ 6.93% – 7.00%)

    • West Virginia, Alaska, Washington D.C., Wyoming, Kansas, Mississippi, Missouri, New Mexico, North Dakota, Oklahoma

These numbers shift daily, but the patterns remain surprisingly consistent.

🧭 The Key Drivers

🏛️ Foreclosure Laws – Judicial foreclosure states (where court approval is required) often come with higher legal and timeline costs—leading to higher interest rates.

💼 Lender Competition – More lenders in competitive housing markets shrink margins and rates. Sparse competition? Higher prices.

📜 Local Fees & Regulations – State-specific transfer taxes, license fees, and title insurance vary—and get passed on to borrowers.

💳 Borrower Credit Quality – Stronger average credit health leads to lower rates; weaker credit profiles push state averages upward.

💰 Loan Size & Market Appeal – In high-balance markets (e.g., California), mortgages are larger, and investor demand for big loans can bring rates down slightly.

🐼 What It Means for You

Living in a higher-rate state doesn’t mean you’re stuck paying more. Here’s how to tilt the scales:

  • Compare quotes – Even lenders in your ZIP can differ. Let them bid for your business.

  • Polish your credit – A small credit score boost could cut hundreds off your monthly payment.

  • Pick the right program – FHA, VA, conventional, and jumbo loans don’t all price the same.

  • Lock smart – Watch the bond market and lock in when mortgage rates dip.

If you're buying in a high-rate area, let’s get strategic. I’ll help you compare lenders, level up your credit, and choose the best refinancing or purchasing approach—no matter where your home is.

Jennifer Patel
Next

FHFA Expands Credit Scoring: VantageScore Joins the Game 🚀