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LendingTree Mortgage Offers Report — April 2020

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  • The average APR offered to borrowers with the best credit scores for refinance loans in March was 3.46%. For purchase loans, borrowers with the best credit scores were offered an average APR of 3.76%. LendingTree considers consumers with the best credit profiles to have credit scores of 800 or higher. People with credit scores at or above 800 receive the best mortgage offers through the LendingTree marketplace, which allows users to compare offers from multiple mortgage lenders. Mortgage rates vary depending upon parameters, including credit score, loan-to-value (LTV) ratio, income and property type.
  • For all consumers, regardless of credit score, the average APR for conforming, 30-year, fixed-rate refinance loans was 3.64% in April, down 35 basis points from March. The APR for refinance loans offered to people with credit scores of 760 or above was 3.51%, and the APR was 3.90% for refinance offers to people with scores between 680 and 719. This 39-point spread between the two credit score brackets amounts to $22,087 in extra costs over the life of the loan for borrowers with lower credit scores.
  • For all consumers, the average APR for conforming 30-year, fixed-rate purchase loans offered on LendingTree’s platform was 3.92% in April, down 11 basis points from March. Consumers with excellent credit scores (760 or above) received an average APR of 3.83%, compared with 4.07% for consumers with scores of 680 to 719 for purchase loans in March. The APR spread of 24 basis points represents $13,638 in additional costs for borrowers with scores of 680 to 719 over the span of 30 years. The increase in costs result from higher interest rates, higher fees or a combination of the two.
  • Aside from highlighting savings by credit score, each month LendingTree also looks at how much money consumers can save by comparing mortgage rates during the loan-shopping process. LendingTree does this by using the Mortgage Rate Competition Index, which represents the median spread between the lowest and highest APRs offered by lenders in our marketplace. For the month of April, the index for refinance borrowers was 0.83, and 0.77 for purchase borrowers. This translates to $38,904 and $33,123, respectively, in lifetime interest savings on a 30-year, fixed-rate loan of $300,000 for all borrowers.
  • For 30-year, fixed-rate mortgages 87.46% of refinance borrowers received offers below 4% while 75.41% of purchase borrowers received offers below 4. A year ago, 1.48% of refinance borrowers and 1.19% of purchase borrowers received rates under 4%.

Historical Mortgage Rate Competition Index

Mortgage Savings Tracker

Refinance mortgage APR offers by credit score


*Lifetime interest paid is calculated based on the overall average loan amount to enable comparison.

Purchase mortgage APR offers by credit score


*Lifetime interest paid is calculated based on the overall average loan amount to enable comparison.

About the report

The LendingTree Monthly Mortgage Offers Report contains data from actual loan terms offered to borrowers on LendingTree.com by lenders. LendingTree believes it’s an important addition to standard industry surveys and reports on mortgage rates. Most quoted industry rates are for a hypothetical borrower with prime credit who makes a 20% down payment. However, most borrowers do not fit this profile.

LendingTree’s report includes the average quoted APR by credit score, together with the average down payment and other metrics described below. LendingTree stratified by credit score, so borrowers have additional information on how their credit profile affects their loan prospects. The report covers conforming, 30-year, fixed-rate loans for both purchase and refinance.

  • APR: Actual APR (annual percentage page) offers to borrowers on our platform.
  • Down payment: Though analogous to the loan-to-value ratio (LTV), LendingTree finds that borrowers identify more closely with the down payment amount. Academic studies have also found that the down payment is the primary concern for homebuyers and is one of the main barriers to entering the homebuying market.
  • Loan amount: The average loan amount borrowers are offered.
  • LTV ratio: Actual loan-to-value (LTV) ratio offered to borrowers on our platform. The LTV ratio is a formula that divides the loan amount by the home’s value to assess a borrower’s lending risk.
  • Lifetime interest paid: This is the total cost a borrower incurs for the loan, inclusive of the interest rate and loan fees.

Typically, the report discusses both purchase and refinance loans in equal measure. However, because of the COVID-19 pandemic’s impact on homebuying, this month’s report primarily focuses on refinance data.

About the Mortgage Rate Competition Index

The LendingTree Mortgage Rate Competition Index is a proprietary measure of the dispersion in mortgage pricing. It measures the APR spread of the best offers available on LendingTree relative to the least competitive (i.e., the highest) rates on 30-year, fixed-rate mortgages. LendingTree’s research shows that mortgage rate competition varies with the financial and operational measures of activity in the mortgage markets. More details on the index are available in a LendingTree white paper.

How the index is formulated

A mortgage shopper enters their information on LendingTree.com. They input loan variables, including the proposed amount and down payment, and property variables, including property type and location. Using LendingTree’s proprietary algorithm, borrowers are matched with lenders based on the criteria they provide. Interested lenders return a rate and fee offer. For this index, LendingTree combines the interest rate and loan fees into the APR and calculates the spread as follows:

The spread is the difference between the highest and lowest offers, in this example, 4.62-4.21=0.41. LendingTree repeats this calculation across 30-year, fixed-rate mortgages that month and then finds the median of the individual spread, which is the index value for that month. This is done separately for purchase and refinance loan requests.

LendingTree research analyst Jacob Channel contributed to this report.

 

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