A new LendingTree study analyzes the savings available by comparing mortgage rates across the country. Each week, LendingTree releases the Mortgage Rate Competition Index, a gauge that shows consumers how much they stand to save by comparing rates when they apply for a mortgage. The index is calculated on a national level to give an indication of the general dispersion of mortgage rates throughout the United States.
You may have heard the phrase “all real estate is local.” It turns out mortgage markets have a strong local component, too. Lenders need to be licensed in each state that they do business, and even many national lenders will have a home bias, originating more loans closer to home. This means that different parts of the country face different mortgage markets in terms of the number and types of lenders, and how their business strategies affect the availability of financing to potential borrowers.
To assess how different markets behave across the country, we created Mortgage Rate Competition Indexes for the 50 largest cities in the country. The methodology is similar to the national index, the only change being that the city indexes are calculated on a quarterly basis.
Click your state to find savings through LendingTree:
Tampa, Kansas City, Portland and New York are the cities where homebuyers saw the biggest rate savings by comparing competing offers. Rates in Tampa had a range of 0.62 followed by Kansas City, Portland and New York at 0.61.
California is where comparing mortgage offers before buying saved the most money. By comparing offers and securing a lower rate, you’re automatically saving money over the term of your mortgage. Larger loan sizes fuel savings of $65,030 in San Francisco, $42,659 in Los Angeles and $42,315 in San Diego.
Significant savings for purchase borrowers in every city. The index ranges from 0.49 in Tulsa to 0.62 in Tampa.
Monthly savings up to $254. For borrowers in San Francisco, a spread of 0.58 translates into a potential savings of $254 per month given the median home price of $900,000 — the highest monthly savings we found.
Even less expensive cities register meaningful savings. In Detroit, a low median home price of $150,000 and narrow spread of 0.54 still add up to $9,952 in lifetime interest savings. Only Tulsa joins Detroit in having savings below $10,000.
The proof is in the pudding. Our method uses median values, so half of borrowers would see smaller savings, but just as importantly, half could see larger savings. There is no way for a borrower to know where they fall in this spectrum without shopping around, so it is imperative to compare lenders and assess their offers.
Competition is influenced by the density of bank branches. Cities with less banks per capita had wider refinance indexes.