States With Lowest Mortgage Rates Today – May, 27 2025

If you're in the market for a home, you're probably glued to mortgage rates. On May 27, 2025, the states boasting the cheapest 30-year new purchase mortgage rates were New York, California, Washington, North Carolina, Texas, Connecticut, Massachusetts, Michigan, and New Jersey, with rates ranging from 6.94% to 7.10%. Finding the best rate can save you thousands over the life of your loan, so let's dive into what's driving these differences across states and how you can snag the best deal.

States With Lowest Mortgage Rates Today – May, 27 2025

Why Do Mortgage Rates Vary So Much by State?

It's a fair question. Why does where you live impact how much you pay for your mortgage? The truth is, several factors are at play. It's not just about the overall economic climate; localized conditions matter, too.

• Lender Presence: Not all lenders operate in every state. The level of competition in a specific region can influence rates. More lenders vying for your business often mean better deals.
• Credit Score Averages: States with higher average credit scores might see slightly lower rates overall. Lenders perceive less risk when lending to areas with strong credit histories.
• Average Loan Size: The size of the average mortgage in a state can also play a role. Larger loan amounts might come with slightly different rates than smaller ones.
• State Regulations: Believe it or not, state-level regulations can impact mortgage rates. Certain states have stricter lending rules or consumer protection laws, which can affect the cost of doing business for lenders.
• Risk Management: Different lenders have different risk appetites. Some may be more willing to offer lower rates to attract business, while others might prioritize higher margins.

Digging Deeper: The States With The Best Mortgage Rates Today

As of May 27, 2025, here's a closer look at the states where you'll find the most attractive 30-year new purchase mortgage rates:

• New York: Consistently a competitive market, New York often sees lenders vying for borrowers in its densely populated areas.
• California: The Golden State's robust housing market and diverse economy tend to attract a wide range of lenders.
• Washington: With a thriving tech industry and strong employment, Washington State offers a stable environment for mortgage lending.
• North Carolina: Growing in popularity, North Carolina's real estate market is showing great promise for new homeowners.
• Texas: The Lone Star State's booming population and diverse economy make it a popular market for lenders.
• Connecticut: Known for its high quality of life, Connecticut offers a stable housing market.
• Massachusetts: A hub of education and innovation, Massachusetts has a competitive lending environment.
• Michigan: Recovering from past economic challenges, Michigan's housing market is now attracting more lenders.
• New Jersey: With its proximity to major metropolitan areas, New Jersey offers a diverse range of housing options.

States With The Highest Mortgage Rates Today

On the flip side, some states have higher average mortgage rates. As of today, May 27, 2025, these are the states where you might face steeper borrowing costs:

• Alaska: The remote location and unique economic factors can lead to higher rates.
• West Virginia: Economic challenges and lower population density can contribute to higher rates.
• Washington, D.C.: Despite being a major economic hub, the District's unique housing market can lead to higher rates.
• Iowa: A more rural state, Iowa's lending market may not be as competitive as more populous areas.
• Hawaii: The high cost of living and unique housing market dynamics can result in higher rates.
• New Mexico: Economic factors and a smaller lender presence can contribute to higher rates.
• South Dakota: Similar to other less densely populated states, South Dakota's market may not be as competitive.

National Averages: Where Do We Stand?

While state-level rates offer valuable insights, it's also helpful to look at national averages. Here's a snapshot of national mortgage rates as of May 27, 2025 (Zillow):

Loan Type	New Purchase Rate
30-Year Fixed	7.12%
FHA 30-Year Fixed	7.37%
15-Year Fixed	6.10%
Jumbo 30-Year Fixed	7.10%
5/6 ARM	7.41%

The 30-year fixed rate is the most popular choice, but the 15-year fixed rate offers a significantly lower interest rate, which could save you a substantial amount of money over the life of the loan.

Don't Fall for Teaser Rates

It's crucial to be aware of “teaser rates.” These are the super-low rates you often see advertised online, but they might not be realistic for most borrowers. These rates often come with strings attached, such as:

• Paying Points Upfront: You might have to pay a significant amount in points (fees) to get that low rate.
• Ultra-High Credit Score: The rate might only be available to borrowers with near-perfect credit.
• Smaller Loan Amounts: The advertised rate could be for a smaller-than-average loan.

The rate you ultimately secure will depend on factors like your credit score, income, debt-to-income ratio, and the size of your down payment.

What's Driving These Fluctuations in Mortgage Rates?

Understanding the factors that influence mortgage rates can help you make informed decisions about when to buy or refinance. Here are the key drivers:

• The Bond Market: Mortgage rates are closely tied to the bond market, particularly the 10-year Treasury yield. When Treasury yields rise, mortgage rates typically follow suit.
• The Federal Reserve (The Fed): The Fed's monetary policy has a significant impact on mortgage rates. When the Fed buys bonds, it can lower rates. Conversely, when the Fed raises interest rates, mortgage rates tend to increase. The Federal Reserve 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.
• Inflation: Inflation is a major concern for lenders. High inflation erodes the value of future payments, so lenders demand higher interest rates to compensate.
• Economic Growth: A strong economy typically leads to higher interest rates as demand for credit increases.
• Competition Among Lenders: The level of competition in the mortgage market can also affect rates. When lenders are competing fiercely for business, they might offer lower rates to attract borrowers.

The Fed's Actions: A Closer Look

The Federal Reserve's (The Fed) actions have been instrumental in shaping mortgage rates over the past few years. As you may recall, in response to the pandemic, the Fed implemented a bond-buying program that helped keep rates low. Then, faced with rising inflation, the Fed began tapering its bond purchases and raising interest rates.

While the Fed doesn't directly set mortgage rates, its policies have a ripple effect. The Fed's actions influence the overall economic environment, which in turn affects investor sentiment and the bond market.

The Fed has 8 rate-setting meetings scheduled in 2025, that means we could see multiple rate-hold announcements in 2025.

How to Find the Best Mortgage Rate for You

Okay, so you know what's happening with rates, but how do you actually get the best deal for yourself? Here's my advice:

• Shop Around: Don't settle for the first rate you see. Get quotes from multiple lenders, including banks, credit unions, and online mortgage companies.
• Improve Your Credit Score: A higher credit score translates to a lower interest rate. Check your credit report for errors and take steps to improve your score before applying for a mortgage.
• Save for a Larger Down Payment: A larger down payment reduces the risk for the lender and can result in a lower rate.
• Consider a Shorter Loan Term: While the monthly payments will be higher, a 15-year mortgage typically comes with a lower interest rate and saves you money over the long run.
• Negotiate: Don't be afraid to negotiate with lenders. If you have a good credit score and a solid financial profile, you might be able to get a better rate.
• Get Pre-Approved: Getting pre-approved for a mortgage gives you a better idea of how much you can afford and strengthens your negotiating position.

The Bottom Line

Mortgage rates can be a bit of a rollercoaster, but understanding the factors that influence them can help you make informed decisions. Shop around, improve your credit score, and don't be afraid to negotiate. With a little research and effort, you can find a mortgage rate that fits your budget and helps you achieve your homeownership dreams.