Mortgage Rates Today: The States Offering Lowest Rates – July 31, 2025

Are you dreaming of owning a home but worried about high mortgage rates? You are not alone. As of Wednesday, understanding where to find the best rates is crucial. Today, the states with the cheapest 30-year new purchase mortgage rates are New York, New Jersey, Kentucky, California, Colorado, North Carolina, Texas, Louisiana, Pennsylvania, and Washington, with rates averaging between 6.75% and 6.83%.. Let's dive into which states are offering a slightly better deal and why mortgage rates vary so much from state to state.

Mortgage Rates Today: The States Offering Lowest Rates

Why Do Mortgage Rates Vary by State?

It's a question I get asked a lot, and the answer is multifaceted. Here's a breakdown of the main reasons:

• Lender Presence and Competition: Not all lenders operate in every state. More competition among lenders usually translates to better rates for borrowers.
• State-Specific Regulations: States have different regulations impacting the mortgage industry, affecting lenders' costs and risk assessments.
• Credit Score Averages: States with higher average credit scores might see slightly better rates overall.
• Average Loan Size: The average loan size requested in a state can impact the rates offered.
• Risk Management by Lenders: Lenders have their own strategies for managing risk, and these can lead to rate variations.

In simpler terms, imagine different grocery stores in different neighborhoods. One might offer cheaper bread because it has more competition or lower operating costs. It's the same with mortgage lenders and states.

The States With the Lowest 30-Year Mortgage Rates

According to Investopedia's report and Zillow's data, these states offer the most attractive 30-year new purchase mortgage rates:

• New York: 6.75%
• New Jersey: 6.77%
• Kentucky: 6.78%
• California: 6.79%
• Colorado: 6.80%
• North Carolina: 6.81%
• Texas: 6.81%
• Louisiana: 6.82%
• Pennsylvania: 6.82%
• Washington: 6.83%

On the Other End: States With the Highest Rates

Conversely, some states have higher average rates. These include:

• Alaska: 7.06%
• Washington, D.C.: 7.04%
• Kansas: 7.03%
• Hawaii: 7.01%
• Iowa: 6.98%
• Nebraska: 6.96%
• New Mexico: 6.95%
• West Virginia: 6.94%
• North Dakota: 6.93%

These states registered averages between 6.93% and 7.06%.

Beyond the 30-Year Fixed: Other Mortgage Options

While the 30-year fixed-rate mortgage is the most popular, it's not the only game in town. Here's a quick look at national averages for other loan types:

Loan Type	Interest Rate
30-Year Fixed	6.86%
FHA 30-Year Fixed	7.55%
15-Year Fixed	5.88%
Jumbo 30-Year Fixed	6.78%
5/6 ARM	7.34%

Remember: FHA loans are insured by the government and are a good option for first-time homebuyers, while Jumbo loans are for larger loan amounts that exceed conforming loan limits. ARMs (Adjustable-Rate Mortgages) have interest rates that can change over time.

The National Picture: Where Mortgage Rates Stand Today

Across the country, the average 30-year new purchase mortgage rate is holding steady at 6.86%. This is down from a high of 7.15% earlier in the year (May 2025) but not as low as the 6.50% we saw in March 2025, or the two-year low of 5.89% last September.

Why the Fluctuations? The Federal Reserve's Role

Mortgage rates don't just magically appear. They're heavily influenced by the Federal Reserve (The Fed) and the bond market. Here's the deal:

• The Fed's Monetary Policy: The Fed sets the federal funds rate, which influences borrowing costs throughout the economy. When the Fed raises rates to combat inflation, mortgage rates tend to rise, and vice versa.
• Bond Market Activity: Mortgage rates are closely tied to the 10-year Treasury yield. When investors buy bonds (driving up their price and lowering their yield), mortgage rates tend to fall.

A Look Back at Recent Fed Actions (2024-2025)

The Fed had a busy couple of years. After aggressively raising rates in 2022 and 2023 to fight inflation, they paused for 14 months and then cut rates three times in late 2024. As of July 2025, they've been holding steady again, but the big question is, what's next?

What's on the Horizon? The Fed's Next Moves

The Fed's next meeting is in September (16-17th). This meeting will be critical because they will update their economic projections. As of right now, the market believes there's only a 47% chance of them cutting rates at that meeting. Ultimately, economists project it will likely bring rates to near 6% by year-end.

For Homebuyers: My Advice

The rollercoaster of rate changes can be stressful, especially for homebuyers. I'll share some personal advice on this volatile market:

1. Comparison Shop: Always, shop around and compare rates from multiple lenders. Don't settle for the first offer you see.
2. Understand Your Credit: Your credit score is a major factor in determining your mortgage rate. Work to improve your credit score if you need to.
3. Consider All Loan Options: Don't limit yourself to just the 30-year fixed rate. Explore FHA loans, ARMs, and other options to see what fits your situation best.
4. Be Patient and Informed: Stay up-to-date on economic news and Fed announcements. It's still helpful to always be prepared for upcoming changes that can affect interests rates.
5. Don't Try to Time the Market: Trying to perfectly time the market and get a historic low rate can be a losing game. Focus on finding a rate that you can comfortably afford.