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Mortgage Rates, Fees & Denial Rates Differ Bigly by State: Where You Pay the Mostest and Get Approved the Leastest, so to Speak

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Via Wolf Street

It’s not always in the states with the highest home prices.

The mortgage interest rate that a homebuyer faces and the mortgage fees, such as “points” and other fees, are tracked as an average across the US. We get reassuring data, such as what the average interest rate for a 30-year fixed-rate mortgage was last week, according to Freddy Mac or the Mortgage Bankers Association or whoever tracks mortgage rates. But buyers may be confronted on average with much higher or lower mortgage rates, mortgage fees, and mortgage application denial rates, depending on the state they’re trying to buy a home in, and the differences between states are breath-taking.

So here we go, average mortgage interest rates, average mortgage fees, and average denial rates by state.

Difference in Mortgage Rates by State.

A study by Clever Real Estate, based on data from the Housing Mortgage Disclosure Act (HMDA) database, shows that the average mortgage interest rate by state in 2018 ranged from 4.24% at the low end to 7.71% at the high end:

  • At the low end, mortgage rates in Massachusetts, Arkansas, and Hawaii averaged 4.6% or below.
  • At the high end, mortgage rates in Maine, West Virginia, and Ohio averaged over 7%.
  • By comparison, the average mortgage rate across all US states was 5.04%.

Many factors impact the average mortgage interest rate, such as the local economy, past foreclosure rates in the state, the average credit profile of home buyers, the density of lenders, and competition or lack thereof among them. In some states with a lot of lenders that have to show growth in mortgage origination to their shareholders, loan officers are eager to make deals and undercut each other.

“But in places like West Virginia, where only 40 out of every 100,000 residents is a loan officer, competition doesn’t have as much influence, leading to inflated rates,” Clever Real Estate said.

The table below shows average mortgage interest rates and average mortgage fees in 2018 for all 50 states and the District of Columbia, from the state with the lowest average mortgage interest rate to the state with the highest:

State Interest rate Mortgage Fees
Hawaii 4.3% 6,968
Arkansas 4.6% 2,013
Massachusetts 4.6% 2,156
Connecticut 4.6% 972
Wyoming 4.7% 1,154
North Dakota 4.7% 1,036
Vermont 4.7% 830
Nebraska 4.7% 1,665
New York 4.7% 1,786
District of Columbia 4.7% 5,396
Rhode Island 4.7% 842
New Jersey 4.7% 1,427
South Dakota 4.7% 1,611
Wisconsin 4.8% 1,144
Montana 4.8% 1,570
New Hampshire 4.8% 1,731
Maryland 4.8% 1,674
North Carolina 4.8% 1,878
Pennsylvania 4.8% 595
Kansas 4.8% 684
Virginia 4.8% 2,479
Minnesota 4.8% 2,092
California 4.8% 3,614
Delaware 4.8% 1,687
South Carolina 4.8% 515
Washington 4.9% 3,079
Oregon 4.9% 2,553
Georgia 4.9% 2,816
Colorado 4.9% 2,457
Idaho 4.9% 1,373
Indiana 4.9% 977
Tennessee 4.9% 2,008
Arkansas 5.0% 2,107
Michigan 5.0% 950
Alabama 5.0% 1,907
Illinois 5.0% 2,255
Utah 5.0% 2,917
New Mexico 5.0% 2,416
Louisiana 5.0% 1,880
Kentucky 5.0% 1,495
Arizona 5.0% 2,860
Florida 5.0% 2,089
Oklahoma 5.0% 1,766
Mississippi 5.0% 2,104
Texas 5.1% 2,491
Missouri 5.3% 1,647
Nevada 6.2% 2,801
Iowa 6.5% 765
Ohio 7.1% 1,153
West Virginia 7.4% 1,599
Maine 7.7% 1,586
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Differences in Mortgage Fees by State.

The study found that mortgage fees, such as “points” and fees for application processing, and documentation preparation, vary even more by state:

  • At the low end, points and fees averaged less than $600 in Pennsylvania and South Carolina.
  • At the high end, points and fees averaged over $5,000 in Washington DC and just under $7,000 in Hawaii.
  • By comparison, average mortgage fees across the US averaged a little under $2,000, or about 1% of the loan amount.

The dollar amount of fees is a function of many factors, including how hungry or lackadaisical competing lenders are, and the amount financed.

But it’s not straightforward. In terms of the price of the home, there are huge differences between states. But the 10 states with the highest fees, include some that have very expensive homes, such as California and Hawaii, and some that have much cheaper homes, such as Georgia and Texas. For example, in Hawaii and California, the average amount financed ($401,000) is almost the same, but fees in Hawaii ($6,968) are nearly twice as high as fees in California ($3,614).

The table shows the mortgage fees in dollar terms for all 50 states and the District of Columbia, from the lowest fees to the highest fees:

State Mortgage Fees Interest Rate
South Carolina $515 4.8%
Pennsylvania $595 4.8%
Kansas $684 4.8%
Iowa $765 6.5%
Vermont $830 4.7%
Rhode Island $842 4.7%
Michigan $950 5.0%
Connecticut $972 4.6%
Indiana $977 4.9%
North Dakota $1,036 4.7%
Wisconsin $1,144 4.8%
Ohio $1,153 7.1%
Wyoming $1,154 4.7%
Idaho $1,373 4.9%
New Jersey $1,427 4.7%
Kentucky $1,495 5.0%
Montana $1,570 4.8%
Maine $1,586 7.7%
West Virginia $1,599 7.4%
South Dakota $1,611 4.7%
Missouri $1,647 5.3%
Nebraska $1,665 4.7%
Maryland $1,674 4.8%
Delaware $1,687 4.8%
New Hampshire $1,731 4.8%
Oklahoma $1,766 5.0%
New York $1,786 4.7%
North Carolina $1,878 4.8%
Louisiana $1,880 5.0%
Alabama $1,907 5.0%
Tennessee $2,008 4.9%
Arkansas $2,013 4.6%
Florida $2,089 5.0%
Minnesota $2,092 4.8%
Mississippi $2,104 5.0%
Arkansas $2,107 5.0%
Massachusetts $2,156 4.6%
Illinois $2,255 5.0%
New Mexico $2,416 5.0%
Colorado $2,457 4.9%
Virginia $2,479 4.8%
Texas $2,491 5.1%
Oregon $2,553 4.9%
Nevada $2,801 6.2%
Georgia $2,816 4.9%
Arizona $2,860 5.0%
Utah $2,917 5.0%
Washington $3,079 4.9%
California $3,614 4.8%
District of Columbia $5,396 4.7%
Hawaii $6,968 4.3%
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Denied mortgage applications.

The percentage of mortgage applications that have been denied varies even more extremely by state, ranging from 0.3% in Texas to 19.3% in Louisiana.

This is not only a function of how strict mortgage lenders are in each state but also to what extent people are encouraged to apply for mortgages even when they cannot afford them.

And it is unrelated to the average amount financed, because Louisiana is at the bottom of this list, with a denial rate of 19.3%, and an average amount financed of $170,000, compared to Hawaii with a denial rate that is nearly as high, at 18.1%, but an average amount financed of $401,000.

The Table below shows the denial rate by state, along with the average amount financed, and the average interest rate, from the lowest denial rate to the highest denial rate:

State  % denied Amount financed
Texas 0.3% $225,763
Washington 0.5% $299,041
Virginia 0.8% $267,049
New York 0.9% $355,646
Minnisota 0.9% $210,539
North Carolina 1.0% $197,380
Ohio 1.1% $149,187
Utah 1.1% $237,895
Michigan 1.2% $156,818
Pennsylvania 1.2% $170,908
Tennessee 1.2% $192,442
Wisconsin 1.3% $165,431
Maryland 1.4% $276,602
Missouri 1.5% $165,378
New Jersey 1.7% $277,165
South Carolina 1.8% $193,618
Nevada 1.8% $247,695
Oregon 2.0% $252,926
Oklahoma 3.0% $151,653
Florida 3.7% $223,952
California 4.2% $401,348
Nebraska 4.8% $162,605
Mississippi 4.8% $136,036
New Hampshire 5.8% $215,176
Georgia 5.9% $206,150
Maine 6.5% $183,870
New Mexico 6.5% $180,032
Colorado 6.5% $284,652
Arizona 6.8% $227,984
Montana 7.3% $223,463
Illinois 8.0% $210,465
Rhode Island 8.1% $208,891
South Dakota 8.7% $177,387
West Virginia 9.4% $136,102
Massachusetts 9.7% $327,635
North Dakota 9.8% $198,692
Indiana 10.4% $148,587
Iowa 10.7% $141,180
Alaska 12.1% $253,901
Wyoming 13.2% $210,342
Kansas 13.4% $168,190
Idaho 15.1% $192,883
District of Columbia 16.4% $472,745
Vermont 16.6% $176,694
Arkansas 17.3% $146,018
Kentucky 17.3% $147,851
Deleware 17.5% $217,364
Hawaii 18.1% $401,522
Connecticut 18.8% $252,880
Alabama 19.0% $163,514
Louisiana 19.3% $170,743
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So this puts the mortgage market into the same category as the health insurance market and other markets were prices vary dramatically depending on which state you live in. And it’s not always the states with the highest home prices, such as California, that have the most expensive affiliated costs, such as mortgage fees and interest rates.

Southern California has decidedly entered the list of expense markets where apartment rents are on the decline. Other decliners from their prior peak-rent include San Francisco, San Jose, Seattle, New York City, Chicago, Honolulu, and Miami. But rents surge other markets by the double-digits. Read…  Rents Fall Southern California, Seattle, Miami, San Francisco, San Jose, Chicago, Honolulu & Others

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