Mortgage rates are falling, which could be a step closer to affordable homeownership for many buyers, especially those in high-cost areas, according to online loan marketplace LendingTree.
Nationally, the average rate on a 30-year fixed mortgage was 6.68% in July this year, a drop from July 2024’s 7.19%. The average calculated monthly payment across the U.S. was about $2,045 this July, $111 less than the previous year, which translates to a savings of $1,304 a month and over $40,000 over the life of the loan, according to LendingTree’s latest analysis.
“That extra $111 a month can give a typical American household a little bit of financial breathing room that they’re so desperate for during these expensive times,” says Matt Schulz, LendingTree chief consumer finance analyst. “It can mean a little extra cash in the emergency fund or toward a credit card payment. It can mean a little extra to put toward investments or other long-term goals. This stuff matters.”
The report puts harder numbers on the kind of limited affordability relief offered by the slow decline in rates from last year, and could preview how much prospective buyers—or homeowners looking to refinance—could save if there are further rate cuts.
Prospective homebuyers in the District of Columbia may be in the best position to purchase a home right now, as the capital’s average monthly payments dropped by almost $214 in July, which amounts to $2,566 in annual savings.
Areas like Massachusetts and California, where the average mortgage is significantly higher than the national average, also experienced sharp decreases in average monthly mortgage payments.
“Those are three very expensive places to live, especially when it comes to housing,” Schulz notes. “Because homes are so expensive there, the dollar savings from a small rate decrease will be greater than they would be in other locations.”
At the opposite end of the spectrum, Minnesota, South Dakota and Wisconsin saw the smallest difference in monthly mortgage payments year-to-year. Minnesota borrowers saved around $24 a month, which amounts to around $293 annually.
LendingTree offers tips to homebuyers for finding the lowest mortgage APR, “because houses are so expensive, even a tiny reduction in APR can mean thousands and thousands of dollars saved over the life of the mortgage,” Schulz says.
Some suggestions include boosting your credit score, which could qualify homebuyers for the most competitive APR’s, contributing more money toward a down payment, which might help homebuyers secure a better rate, considering and researching adjustable-rate mortgages, negotiating and asking lenders about discounts and, most importantly, shopping around with different lenders.
“Rates can vary significantly from one lender to the next, so if you don’t take the time to shop around for rates, you’re likely doing yourself and your family a disservice,” Schulz says.
“You have much more power over mortgage rates than you think you do. You can’t control when rates rise or fall. You can’t control when the Fed makes moves. However, you can shop around for the best rates. You can pay points to bring down your APR. You can consider a 15-year mortgage instead of a 30-year mortgage,” he added.
For the full LendingTree report, click here.
