Mortgage Payments Fall the Most in DC, Massachusetts, and California

If you're looking to buy a home or even just curious about the housing market, you've probably noticed a lot of talk about mortgage rates. And for good reason! A recent LendingTree study shows that mortgage payments are falling most significantly in the District of Columbia, Massachusetts, and California. This isn't just a small dip; for many, it translates into tens of thousands of dollars saved over the life of a loan.

I can tell you that this kind of shift is a breath of fresh air, especially after a period of rising costs. The average APR for a 30-year, fixed-rate mortgage across the U.S. has dropped by a noticeable 0.51 percentage points between July 2024 and July 2025. This brings the average APR down to 6.68% from 7.19% a year ago, and this decline could potentially save borrowers a whopping $40,000 or more over the typical 30-year mortgage term.

Mortgage Payments Fall the Most in DC, Massachusetts, and California

The National Picture: A Welcome Downward Trend

Let's break down what this means on a national level first. According to LendingTree's analysis, this drop in interest rates has translated into an average monthly saving of $111.71 for homeowners across the U.S. That might not sound like a fortune at first glance, but when you multiply that by 12 months, you get over $1,340 in annual savings. And over the entire 30-year lifespan of a mortgage, that adds up to a remarkable $40,216.81 in savings.

So, what's driving this positive change? A key factor is the Federal Reserve's decisions to cut the federal funds rate. While the Fed doesn't directly set mortgage rates, their actions and the economic signals they send certainly influence them. When the Fed makes cuts – like the quarter-point cut in September 2025 and the anticipation of more to come – it often boosts confidence in the market that borrowing costs will ease up.

Key Findings from the LendingTree Study:

• Nationwide APR Drop: 30-year, fixed-rate mortgage APRs decreased by an average of 0.51 percentage points across the U.S. from July 2024 to July 2025.
• Average APR Now: In July 2025, the average APR stood at 6.68%, down from 7.19% in July 2024.
• Monthly Savings: This decline led to an average reduction of $111.71 in calculated monthly mortgage payments nationwide.
• Lifetime Savings: The total estimated savings over 30 years reached an impressive $40,216.81 per borrower.

It's incredibly encouraging to see these numbers. As Matt Schulz, LendingTree's chief consumer finance analyst, pointed out, these savings offer much-needed financial breathing room. That extra bit each month can go towards building an emergency fund, paying down other debts, or even saving for long-term investments and goals. In these times when household budgets can feel stretched thin, every bit of extra cash makes a difference.

Where The Savings Are Biggest: DC, Massachusetts, and California Lead The Pack

Now, let's dive into the states where the savings are truly striking. The LendingTree study highlights that the District of Columbia, Massachusetts, and California are seeing the most significant drops in their calculated mortgage payments.

Why are these areas seeing the biggest drops? It's a combination of the general decrease in interest rates and the fact that these are some of the country's most expensive real estate markets.

• District of Columbia: Borrowers in D.C. experienced the largest monthly payment decrease, shedding $213.85 from their average monthly payment.
• Massachusetts: Homebuyers in the Bay State saw their monthly payments fall by approximately $210.42.
• California: Golden State residents are looking at savings of around $209.26 per month on their mortgage payments.

These aren't just small windfalls. Over the 30-year life of a loan, these figures translate into substantial savings:

• District of Columbia: An estimated $76,984.34 in savings over 30 years, thanks to mortgage rates dropping by an average of 0.69 percentage points.
• Massachusetts: Around $75,752.61 in lifetime savings, driven by a 0.72 percentage point drop in mortgage rates.
• California: An estimated $75,333.06 in lifetime savings, due to rates falling by 0.64 percentage points on average.

It makes intuitive sense. When home prices and, consequently, loan amounts are higher, even a small percentage drop in the interest rate results in a larger dollar amount saved. As Matt Schulz explained, “Because homes are so expensive there, the dollar savings from a small rate decrease will be greater than they would be in other locations.”

To put this into perspective, the average mortgage amount across the U.S. is around $318,245. However, in D.C., Massachusetts, and California, average loan amounts are considerably higher:

• District of Columbia: Average loan amount of $463,298.
• Massachusetts: Average loan amount of $436,092.
• California: Average loan amount of $489,476.

The math is simple: a higher principal means larger savings when the interest rate goes down.

Where Savings Are Less Pronounced: Minnesota, South Dakota, and Wisconsin

On the other end of the spectrum, some states are seeing more modest decreases in their mortgage payments. According to the LendingTree study, Minnesota, South Dakota, and Wisconsin experienced the smallest payment drops.

• Minnesota: Saw an average monthly savings of just $24.40.
• South Dakota: Experienced a monthly reduction of about $25.40.
• Wisconsin: Noted an average monthly saving of approximately $31.08.

While these numbers might seem small compared to the leading states, it's crucial to remember that every bit helps. These savings, though smaller, still add up.

• Minnesota: Over 30 years, this translates to roughly $8,784.45 in savings.
• South Dakota: An estimated $9,142.86 in lifetime savings.
• Wisconsin: Roughly $11,190.38 in savings over three decades.

These smaller savings are linked to a few factors. Firstly, the rate decreases in these states were significantly lower than the national average. Minnesota, for example, saw a rate decrease of only 0.12 percentage points, compared to the U.S. average of 0.51 percentage points.

Secondly, and this is where my experience really kicks in, states in the Midwest, where these three states are located, generally have lower home prices and smaller average mortgage amounts compared to coastal or high-cost metropolitan areas. Since savings are directly proportional to the loan size, naturally, the dollar amount of savings from rate drops will be less pronounced. This doesn't diminish the value of the savings, but it does explain why the figures are different.

A Rare Exception: North Dakota Sees Payments Rise

In an interesting twist, North Dakota was the only state where average mortgage payments actually increased between July 2024 and July 2025. While the increase was modest – a mere 0.03 percentage points in the average APR, going from 6.81% to 6.84% – it resulted in a small rise of $5.16 in the average monthly payment. Over 30 years, this adds up to an additional cost of $1,858.24.

This is a good reminder that real estate and mortgage markets are dynamic. While the nationwide trend has been positive for borrowers, local economic conditions and specific market forces can lead to variations from state to state.

What Does This Mean for Homebuyers and Owners?

For Potential Buyers:

This is fantastic news! A drop in mortgage rates, especially a significant one like we've seen, makes homeownership more accessible and affordable. If you're in the market to buy, especially in DC, Massachusetts, or California, you could be looking at substantial long-term savings. It might be the perfect time to get pre-approved and explore your options. Even in states where savings are smaller, the extra cash flow can make a difference.

For Existing Homeowners:

If you already own a home and have a mortgage, even older ones from when rates were higher, this could be an opportune moment to explore refinancing. Refinancing to a lower interest rate can lower your monthly payments, free up cash for other financial goals, or even shorten the term of your loan. It’s something I always recommend clients consider when rates move this favorably.

Table: Comparing Savings Across States (July 2024 vs. July 2025)

State/District	Average Monthly Savings	Estimated 30-Year Savings	Rate Change (pp)	Avg. Loan Amount (Est.)
District of Columbia	$213.85	$76,984.34	0.69	$463,298
Massachusetts	$210.42	$75,752.61	0.72	$436,092
California	$209.26	$75,333.06	0.64	$489,476
United States (Avg.)	$111.71	$40,216.81	0.51	$318,245
Minnesota	$24.40	$8,784.45	0.12	N/A
South Dakota	$25.40	$9,142.86	0.15	N/A
Wisconsin	$31.08	$11,190.38	0.17	N/A

(Note: Loan amounts for Minnesota, South Dakota, and Wisconsin were not explicitly provided in the data for comparison in the same way as the top states, but the principle of lower loan amounts contributing to smaller dollar savings remains.)

The Takeaway: Good News for Many

The recent dip in mortgage rates is more than just a statistical blip; it's a tangible benefit for a vast number of Americans. While the savings are most dramatic in areas with higher home prices like Washington D.C., Massachusetts, and California, every borrower stands to gain something. These reductions in monthly payments provide crucial financial relief, making the dream of homeownership more attainable and easing the burden for existing homeowners.

As always, it's wise to stay informed about market trends and consult with trusted financial professionals to make the best decisions for your personal financial situation.