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LendingTree Mortgage Offers Report — January 2020

  • January mortgage offers for borrowers with the best credit profiles had an average APR of 3.74% for conforming 30-year, fixed-rate purchase loans. The average APR offered to these borrowers for refinance loans in January was lower, at 3.72%. We consider people 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 purchase loans offered on LendingTree’s platform was 4.05% in January, down 17 basis points from December. The loan interest rate of 3.93% was down 17 basis points from December. (We emphasize the APR because lenders often make changes to other fees in response to fluctuating interest rates.
  • Consumers with excellent credit scores (760 and up) received an average APR of 3.82% compared with 4.28% for consumers with scores of 680 to 719 for purchase loans in January. The APR spread of 46 basis points is down one point from December. For the average purchase loan amount of $251,405 in January, the spread represents $23,959 in additional costs for borrowers over the span of 30 years. The additional costs result from higher interest rates, higher fees or a combination of the two.
  • For all consumers, the average APR for conforming 30-year, fixed-rate refinance loans was 3.97% in January, down 17 basis points from December. The APR for refinance loans offered to people with credit scores above 760 was 3.80%, and the APR was 4.17% for refinance offers to people with scores between 680 and 719. This 37-point spread between the two credit score brackets amounts to $19,950 in extra costs over the life of the loan for borrowers with lower credit scores
  • Average proposed purchase down payments rose to $66,425 in January, up from $63,879 in December.
  • 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. We do 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 January, the index for purchase borrowers was 0.91, and 1.1 for refinance borrowers. This translates to $41,253 or $49,857, respectively, in lifetime interest savings on a 30-year, fixed-rate loan of $300,000 for all borrowers. 
  • For 30-year, fixed-rate mortgages, 66.1% of purchase borrowers received offers below 4%, while 70.2% of refinance borrowers received offers below 4%. A year ago, virtually no borrowers received rates under 4%.  

Purchase APR by credit score range 

Historical Mortgage Rate Competition Index 

Mortgage Savings Tracker 

Purchase mortgage offers by credit score 

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

Refinance mortgage 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. We believe it is 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. Most borrowers do not fit this profile. Our report included the average quoted APR by credit score, together with the average down payment and other metrics described below. We stratified by credit score, so borrowers have added information on how their credit profile affects their loan prospects. The report covers conforming, 30-year fixed loans for both purchase and refinance.

  • APR: Actual APR offers to borrowers on our platform.
  • Down payment: Though analogous to the loan-to-value ratio (LTV), we find 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: Actual 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 fees.

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. Our 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 our proprietary algorithm, LendingTree matches borrowers with lenders based on the criteria they provide. Interested lenders return a rate and fee offer. For our index, we combine the interest rate and loan fees into the APR and calculate the spread as follows:

The spread is the difference between the highest and lowest offers, in this example, 4.62-4.21=0.41. We repeat this calculation across 30-year, fixed-rate mortgage loans that month

and then find the median of the individual spread, which is our 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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