PROVIDENCE – Rhode Island's average mortgage interest rate of 7.875% is the highest in the nation, according to a study by Flatworld Solutions.
Researchers at the business process outsourcing, business process automation and artificial intelligence services company based in Princeton, N.J., calculated the state's average mortgage rate using data from the Consumer Financial Protection Bureau, which reflects rates from various lenders and is updated regularly. Data was collected on April 30, 2024.
The analysis focused on a hypothetical $417,700 home purchase with a 10% down payment and a 700-719 credit score, representing a typical homebuyer profile.
Data showed that 26 other states also had a 7.875% mortgage rate, including Massachusetts, Connecticut, New Hampshire, Vermont, Maine, Hawaii, Idaho, Indiana, Iowa, Kansas, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio, Oregon, Arkansas, South Dakota, Utah, Washington, Wisconsin and Wyoming.
Texas had the lowest average mortgage rate in the nation at 7.55%, according to the study. Georgia and Florida, both at 7.625%, and North Carolina at 7.662% followed Texas.
The full report can be found here.
The average rate on a 30-year mortgage dipped to just below 7% this week, with little relief for prospective homebuyers already facing the challenges of rising housing prices and a relatively limited inventory of homes on the market.
The rate fell to 6.99% from 7.03% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.71%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also eased this week, lowering the average rate to 6.29% from 6.36% last week. A year ago, it averaged 6.07%, Freddie Mac said.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Yields eased this week following economic data showing slower growth. Signs that the economy is cooling can drive inflation lower, which could persuade the Federal Reserve to lower its short-term interest rate from its highest level in more than two decades.
The Fed, which is scheduled to hold its next policy meeting next week, has maintained it doesn’t plan to cut interest rates until it has greater confidence that price increases are slowing sustainably to its 2% target. Until then, mortgage rates are unlikely to ease significantly, economists say.
“Overall, we anticipate inflation will continue to slow and will allow mortgage rates to decrease to around 6.5% by the end of 2024, early 2025,” said Ralph McLaughlin, senior economist at Realtor.com.
The national median monthly payment listed on home loan applications was $2,256 in April, a 2.5% increase from the previous month and 6.8% higher than it was a year earlier, according to data from the Mortgage Bankers Association.
Material from The Associated Press was used in this story.
