States With the Lowest Mortgage Rates Today – May 5, 2025

Looking to buy a home and snag the best possible mortgage rate? As of today, May 5, 2025, the states with the lowest mortgage rates for a 30-year new purchase are New York and Texas. Following closely are California, Colorado, Florida, Georgia, North Carolina, Virginia, and Washington. Understanding where rates are lowest can save you a significant amount of money over the life of your loan.

The mortgage market can feel like a rollercoaster, and navigating it can be daunting. That's why I'm breaking down today's rates, state by state, and exploring what factors are influencing these fluctuations. Think of this as your guide to understanding how to find the best mortgage rates for you, not just the national averages.

States With the Lowest Mortgage Rates Today – May 5, 2025

Why Do Mortgage Rates Vary By State?

You might be wondering, “Why doesn't everyone just get the same rate?” It's a valid question! The reality is, mortgage rates are localized. Several reasons explain this:

• Different Lenders, Different Regions: Not all lenders operate in every state. Some focus on specific regions, leading to variations in competition and pricing.
• State-Level Regulations: Each state has its own rules and regulations regarding mortgages. These can affect the cost of doing business for lenders, which they then factor into the rates they offer.
• Credit Score Differences: Average credit scores can vary from state to state. Since credit score is a major factor in determining interest rates, this influences the average rates seen in a particular state.
• Average Loan Size: The average loan amount people are borrowing can vary geographically. This can also factor into the rates offered.
• Lender Risk Management: Lenders have different approaches to managing risk. Some might be more aggressive in certain markets than others, leading to variations in rates.

A Closer Look at Today's Rates (May 5, 2025)

Here’s a snapshot of where mortgage rates stand today (Source: Zillow):

• Lowest Rates (30-Year New Purchase):
  • New York : 6.82% – 6.92%
  • Texas : 6.82% – 6.92%
  • California : 6.82% – 6.92%
  • Colorado : 6.82% – 6.92%
  • Florida : 6.82% – 6.92%
  • Georgia : 6.82% – 6.92%
  • North Carolina : 6.82% – 6.92%
  • Virginia : 6.82% – 6.92%
  • Washington : 6.82% – 6.92%
• Highest Rates (30-Year New Purchase):
  • Alaska: 6.99% – 7.12%
  • West Virginia: 6.99% – 7.12%
  • Washington, D.C.: 6.99% – 7.12%
  • Mississippi: 6.99% – 7.12%
  • South Dakota: 6.99% – 7.12%
  • North Dakota: 6.99% – 7.12%
  • New Hampshire: 6.99% – 7.12%
  • Rhode Island: 6.99% – 7.12%
  • Iowa: 6.99% – 7.12%

It's crucial to remember that these are averages. Your actual rate could be higher or lower depending on your individual circumstances.

National Mortgage Rate Trends

Let's zoom out and look at the bigger picture:

• 30-Year Fixed (New Purchase) National Average: 6.95% (as of May 5, 2025)
• Recent Fluctuations: After a period of slight wavering, rates jumped slightly today (May 5, 2025), adding 7 basis points.
• Historical Context:
  • Mid-April 2025: Rates peaked at 7.14%.
  • March 2025: Rates hit their lowest point of the year at 6.50%.
  • September 2024: Rates reached a two-year low of 5.89%.

National Averages of Lenders' Best Mortgage Rates

Loan Type	New Purchase
30-Year Fixed	6.95%
FHA 30-Year Fixed	7.33%
15-Year Fixed	5.97%
Jumbo 30-Year Fixed	6.90%
5/6 ARM	7.20%

Decoding Those Teaser Rates

You know those super-low mortgage rates you see advertised online? Be cautious! These are often “teaser rates” designed to grab your attention. They usually come with strings attached:

• Points: You might have to pay “points” upfront (a percentage of the loan amount) to get that low rate.
• Ultra-High Credit Score: The rate might only be available to borrowers with exceptional credit.
• Smaller Loan Amounts: Sometimes, the best rates are reserved for smaller loans.

What's Driving Mortgage Rate Changes?

Understanding the forces that influence mortgage rates can help you make informed decisions:

• The Bond Market: Mortgage rates are closely tied to the bond market, especially the yield on the 10-year Treasury note. When bond yields rise, mortgage rates tend to follow suit.
• The Federal Reserve (The Fed): The Federal Reserve's monetary policy plays a significant role. The Fed influences mortgage rates through its bond-buying programs and by setting the federal funds rate.
• Competition: The level of competition between lenders can also impact rates. When lenders are competing fiercely for your business, they may offer lower rates.

The Fed's Impact: A Closer Look

The Federal Reserve's actions have a ripple effect on the mortgage market. Here's a simplified explanation:

• Bond Buying: During the pandemic, the Fed bought billions of dollars in bonds to stimulate the economy. This kept mortgage rates artificially low.
• Tapering: In late 2021, the Fed started reducing its bond purchases (“tapering”). This put upward pressure on rates.
• Raising the Federal Funds Rate: To combat inflation, the Fed aggressively raised the federal funds rate in 2022 and 2023. While this rate doesn't directly control mortgage rates, it has an indirect impact.
• Rate Cuts (Recent History): As inflation cooled, the Fed started to cut rates towards the end of 2024. However, the Fed has since held steady on further rate cuts in their first 2025 meeting.

The Fed's decisions are based on economic data and its assessment of inflation and employment. It's a complex balancing act!

How to Find Your Best Mortgage Rate

The most important thing you can do is shop around. Don't settle for the first rate you're offered.

Here's my advice, gathered from years of watching the mortgage market:

• Improve Your Credit Score: A higher credit score is key to getting the best rates. Check your credit report for errors and work to pay down debt.
• Save for a Larger Down Payment: Putting down more money reduces the lender's risk and can result in a lower interest rate.
• Compare Rates from Multiple Lenders: Get quotes from banks, credit unions, and online lenders. Don't be afraid to negotiate!
• Consider Different Loan Types: Explore options like FHA loans (if you qualify) or adjustable-rate mortgages (ARMs), but be aware of the risks involved.
• Don't Forget About Fees: Pay attention to all the fees associated with the loan, such as origination fees, appraisal fees, and closing costs.

Beyond Interest Rate: Consider the Big Picture

While getting a low interest rate is important, it's not the only factor to consider. Think about the overall cost of the loan, including fees, and whether the loan terms fit your long-term financial goals. A slightly higher rate might be worth it if the loan has more favorable terms, such as no prepayment penalties.

The mortgage market is constantly evolving, but with a little knowledge and effort, you can find the right loan for your needs. By understanding the factors that influence rates and shopping around for the best deal, you can achieve your homeownership dreams without breaking the bank.