States With Lowest Mortgage Rates Today – May, 23 2025

Looking for the best mortgage rates today? On May 23, 2025, the states boasting the cheapest 30-year new purchase mortgage rates are New York, California, New Jersey, Kentucky, Indiana, North Carolina, Tennessee, and Texas, with average rates hovering between 7.04% and 7.12%. These states provide a slightly more affordable entry point for homebuyers compared to other regions.

States With Lowest Mortgage Rates Today – May, 23 2025

Buying a home is a big deal, and finding the best mortgage rate can save you thousands of dollars over the life of your loan. It's not just about the sticker price of the house; it's about the long-term cost of borrowing the money to buy it. That’s why I’m diving into the latest data on mortgage rates across the United States, specifically focusing on where you can find the lowest rates as of today.

Current Mortgage Rate Overview: A National Perspective

Before we zoom in on specific states, let's take a look at the national average. According to Zillow, as of May 23, 2025, the average rate for a 30-year fixed-rate mortgage is 7.15%. This is a slight increase from earlier in the week, rising by 4 basis points. It's also the highest we've seen since May 2024.

Here’s a quick recap of national averages across different loan types:

• 30-Year Fixed: 7.15%
• FHA 30-Year Fixed: 7.37%
• 15-Year Fixed: 6.13%
• Jumbo 30-Year Fixed: 7.16%
• 5/6 ARM: 7.54%

It's interesting to note how much rates have fluctuated this year. Back in March, we saw 30-year rates dip to 6.50%, the lowest of the year so far. And if we rewind to September of last year, they were even lower, hitting a two-year low of 5.89%. This just goes to show how dynamic the mortgage market can be.

States Offering the Most Competitive Mortgage Rates

Okay, let's get down to the key information. Which states are offering the best deals for homebuyers right now? As of today, May 23, 2025, these states are leading the pack with the lowest 30-year mortgage rates for new purchases:

• New York
• California
• New Jersey
• Kentucky
• Indiana
• North Carolina
• Tennessee
• Texas

The average rates in these states range from 7.04% to 7.12%. While the difference may seem small, even a fraction of a percentage point can translate to significant savings over the life of a 30-year mortgage.

States With Higher Mortgage Rates

On the flip side, some states have higher average mortgage rates. As of today, these states have the most expensive 30-year rates:

• Alaska
• Washington, D.C.
• West Virginia
• Hawaii
• Iowa
• New Mexico
• Maryland

In these areas, the average rates range from 7.21% to 7.30%. If you're shopping for a home in one of these states, it's especially important to compare rates from multiple lenders to ensure you're getting the best deal possible.

Why Do Mortgage Rates Vary by State?

You might be wondering why mortgage rates aren't uniform across the country. There are several factors that contribute to these state-by-state differences:

• Lender Presence: Not all lenders operate in every state. The level of competition between lenders can influence rates. If there are fewer lenders in a particular state, they may not need to offer the most competitive rates to attract borrowers.
• Credit Score Averages: States with higher average credit scores may see slightly lower rates. Lenders view borrowers with good credit as less risky, so they're willing to offer more favorable terms.
• Average Loan Size: In states where the average home price is higher, the average loan size will also be larger. This can impact rates, as larger loans may be perceived as riskier by lenders.
• State Regulations: Mortgage lending is regulated at both the federal and state levels. Different states have different rules and regulations, which can affect the cost of doing business for lenders and, consequently, the rates they offer.
• Risk Management Strategies: Different lenders have varying approaches to risk management. Some lenders may be more conservative and charge slightly higher rates to offset potential losses, while others may be more aggressive and offer lower rates to gain market share.

The Importance of Shopping Around

One of the most crucial pieces of advice I can give you is to shop around for the best mortgage rates. Don't just settle for the first offer you receive. Get quotes from multiple lenders and compare them carefully. This includes banks, credit unions, and online mortgage companies.

Remember, the rates you see advertised online are often “teaser rates.” These are the most attractive rates a lender offers, but they may come with strings attached, such as paying points upfront or requiring an exceptionally high credit score.

Your actual mortgage rate will depend on several factors, including:

• Your Credit Score: This is one of the most important factors. A higher credit score typically translates to a lower interest rate.
• Your Income: Lenders want to ensure you can afford to repay the loan. They'll look at your income and debt-to-income ratio (DTI) to assess your ability to make monthly payments.
• Your Down Payment: A larger down payment can result in a lower interest rate because it reduces the lender's risk.
• The Loan Type: Different loan types (e.g., fixed-rate, adjustable-rate, FHA, VA) come with different rates and terms.
• The Property Type: The type of property you're buying (e.g., single-family home, condo, manufactured home) can also affect your rate.

Factors Influencing Mortgage Rates

Mortgage rates are influenced by a complex interplay of economic and market factors. Understanding these factors can help you make informed decisions about when to buy a home and lock in a mortgage rate. Some of the key drivers include:

• The Bond Market: Mortgage rates tend to track the yield on the 10-year Treasury bond. When bond yields rise, mortgage rates typically follow suit, and vice versa.
• The Federal Reserve (The Fed): The Fed's monetary policy decisions can have a significant impact on mortgage rates. For example, when the Fed buys bonds, it can lower rates. Conversely, when the Fed raises interest rates, mortgage rates tend to increase as well.
• Inflation: Inflation erodes the value of money over time. Lenders want to be compensated for this risk, so higher inflation typically leads to higher mortgage rates.
• Economic Growth: A strong economy can lead to higher demand for housing, which can push up mortgage rates.
• Competition Among Lenders: When there's intense competition among lenders, they may lower their rates to attract borrowers.

Historically, The Fed maintained the federal funds rate at its peak level for almost 14 months, beginning in July 2023. But in September, the central bank announced a first rate cut of 0.50 percentage points, and then followed that with quarter-point reductions in November and December. For its third meeting of the new year, however, the Fed opted to hold rates steady—and it’s possible the central bank may not make another rate cut for months. With a total of eight rate-setting meetings scheduled per year, that means we could see multiple rate-hold announcements in 2025.

Key Takeaways for Homebuyers

• Shop Around: Get quotes from multiple lenders and compare rates and fees.
• Improve Your Credit Score: A higher credit score can help you qualify for a lower interest rate.
• Save for a Larger Down Payment: A larger down payment can reduce the lender's risk and potentially lower your rate.
• Understand the Factors That Influence Mortgage Rates: Keep an eye on economic indicators and Fed policy decisions.
• Use a Mortgage Calculator: Estimate your monthly payments and see how different loan scenarios affect your affordability.

Final Thoughts

Navigating the mortgage market can be complex, but with the right information and resources, you can find the best possible rate for your situation. Remember, even a small difference in interest rates can save you a substantial amount of money over the life of your loan. As of May 23, 2025, keep an eye on states like New York, California, and New Jersey for potentially lower rates, but always compare multiple offers to ensure you're getting the best deal for your unique financial situation. Good luck with your home buying journey!