Nearly 82% of Purchase Borrowers Received Mortgage Rates Under 5% Last Week
Homebuyers could have seen median lifetime savings of $28,938 in interest on a $300,000 loan by comparison shopping for the best mortgage rates.
Jan. 22, 2019 — Charlotte, N.C.
Each week, LendingTree reports how much consumers can save by comparing rates during the loan-shopping process. We describe these savings in two ways, providing the most detailed data on mortgage rates. The LendingTree Mortgage Rate Distribution details the range of mortgage interest rates on offer. The Mortgage Rate Competition Index is the median spread between the lowest and highest APRs offered by lenders in our marketplace.
For the week ending Jan. 20, 2019, the share of borrowers with rates under 5% remained above 80%, which may lend some support to a weakening housing market.
Mortgage Rate Distribution
- For 30-year, fixed-rate mortgages, 81.9% of purchase borrowers received offers under 5%. That is up from 80.7% the previous week. A year ago, 94.1% of purchase offers were under 5%.
- Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4.625% was the most common interest rate. This rate was offered to 19.8% of borrowers.
- Of 30-year, fixed-rate mortgage refinance borrowers, 75.3% received offers under 5%, which is up from 72.2% the previous week. A year ago, 94.2% of refinance offers were under 5%.
- Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 4.625%, offered to 20.6% of borrowers.
Mortgage Rate Competition Index
- Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 0.62, which is down from 0.66 the previous week.
- How big of a deal is it to get a mortgage APR that’s 0.62 percentage points lower than the competition? Over 30 years, that could translate to $28,938 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
- The index was wider in the refinance market at 0.79, down 2 basis points from the previous week. Refinance borrowers could have saved $37,246 by shopping for the lowest rate.
- The distribution of rates — and, as a result, the Mortgage Rate Competition Index — has widened as rates increased, reflecting how mortgage lenders may change the rates at which they can offer consumers loans, depending on their unique business circumstances.
Rate Distribution – Purchase
Rates 5% and Above – Purchase
Mortgage Savings Tracker
Mortgage Rate Competition Index
Want to learn more about what economic factors influence mortgage rates?
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 white paper on LendingTree’s website.
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 provided. Interested lenders return a rate and fee offer. For our index, we combine the rate and fees into an 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 week and then find the median of the individual spread, which is our index value for that week. This is done separately for the population of purchase and refinance loan requests.