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Homebuyers in these American cities get the best mortgage rates

As the cost of homeownership continues to grow out of reach for many Americans, mortgage interest rates have become a central concern for homebuyers and policymakers alike. The Federal Reserve’s ongoing efforts to curb inflation are keeping interest rates high for longer than many analysts expected, making home loans persistently expensive. These high interest rates have cooled the housing market somewhat, but have not been enough to offset the increase in financing costs. As a result, many potential buyers are faced with the difficult combination of steep home prices and expensive financing.

Mortgage interest rate trends

Mortgage rates have remained stable, after rising at their fastest rate in more than fifty years


Source: Construction Coverage analysis of Freddie Mac data | Image credits: Construction Coverage

After rising to a staggering 18.63% in the early 1980s, the average thirty-year mortgage rate has steadily declined, reaching an all-time low of 2.65% in early 2021. However, interest rates have since risen significantly, reaching 7.79% in October. 2023 and in May 2024 at 7.22%.

But perhaps most remarkable is the speed at which mortgage rates have risen. Even faster than the early 1980s, when rates rose more than 50% annually, interest rates skyrocketed to an unprecedented 138% in November 2022 in response to pandemic-era inflation. This has had a major impact on housing costs, with estimated monthly mortgage payments for the average-priced American home today more than 50% higher than just two years ago.

Mortgage interest rate characteristics by location

Homebuyers in North Dakota and Alaska got the best mortgage rates in 2023


Source: Construction Coverage analysis of Freddie Mac data | Image credits: Construction Coverage

Interest rates vary geographically due to local market conditions, residents’ financial health, and laws governing lenders. In the US, 62.8% of all residential loans approved in 2023 had an interest rate of less than 7%. However, in some parts of the country, an even higher proportion of home buyers managed to secure a mortgage rate below this figure. At the state level, North Dakota and Alaska had the largest shares of fixed-rate mortgages, with rates below 7% in 2023, at 73.0% and 72.3%, respectively. By comparison, fewer buyers in the South received favorable rates. Only 42.6% of mortgages approved in Mississippi had interest rates below 7% – the lowest in the nation.

Below is an overview of the mortgage rate landscape for more than 380 metropolitan areas and all 50 states. Researchers from Construction Coverage, a website that provides construction software and insurance reviews, analyzed the latest data from the Home Mortgage Disclosure Act 2023. For more detailed information on data sources and calculations, see the Methodology section.

Major metropolises with the best mortgage rates


Medium-sized metropolises with the best mortgage rates


Small metropolises with the best mortgage rates


States with the best mortgage rates


Methodology


Photo credits: tab62 / Shutterstock

To determine the locations where homebuyers will get the best mortgage interest rates, researchers at Construction Coverage analyzed the latest 2023 Federal Financial Institutions Examination Council data. Residential Mortgage Disclosure Act. The researchers ranked metros based on the share of all fixed-rate mortgages with an interest rate of less than 7%. Only conventional residential mortgages approved in 2023 were included in the analysis. In the event of a tie, the metropolis with the largest share of 30-year mortgages with an interest rate of less than 7% ranked higher. Researchers also calculated the share of 15-year mortgages with interest rates below 7%, and the median interest rate for all fixed-rate mortgages, the change in the median interest rate for all fixed-rate mortgages (2022-2023 ), and the median home sales prices for homes financed with 30- and 15-year mortgages.

To increase relevance, only records with complete data were included in the analysis and metropolitan areas were grouped into the following cohorts based on population size:

  • Small metros: less than 350,000
  • Mid-size metros: 350,000-999,999
  • Major metros: 1,000,000 or more

For full results, see Homebuyers in these US cities get the best mortgage rates for construction coverage.