Cities Where Borrowers Save the Most by Shopping Around for Mortgage Loans

As interest rates rise, the amount of money consumers can save by shopping around and comparing offers can be significant. A new study from online loan marketplace LendingTree shows where shopping can save you the most money.

To help consumers understand how much they can save, LendingTree created a Mortgage Rate Competition Index that measures the basis point spread between high and low APRs offered to users through the LendingTree marketplace.

This report uses that index to analyze the rate difference and dollar savings for the 50 largest metropolitan areas in the United States. Analysts review the same rate difference and savings on a national basis in the weekly Mortgage Rate Competition Index.

“If you are shopping for a home in San Francisco, taking the first mortgage offer you receive and not comparing it could cost you nearly $100,000 in interest over the life of your loan,” said Tendayi Kapfidze, Chief Economist at LendingTree. “In Cincinnati, it could cost you nearly $24,000. LendingTree, the nation’s leading online loan marketplace, allows consumers to shop around and compare mortgage offers, potentially saving them thousands of dollars.”

Key findings:

  • Homebuyers in Cincinnati and Houston had the biggest potential rate savings by comparing competing offers. Rates in Cincinnati had a range of 64 basis points, followed by Houston at 61, then San Antonio, Dallas, Phoenix and Chicago at 58.
  • Comparing mortgage offers before buying saved the most money in California. Large loan sizes fuel lifetime savings of $99,544 in San Francisco, $75,330 in San Diego and $72,557 in Los Angeles.
  • Significant savings for purchase borrowers in every city. The index ranges from 42 basis points in New Orleans to 64 in Cincinnati.
  • Monthly savings up to $279. For borrowers in San Francisco, a spread of 51 points translates into $279 a month, given the median home price of $900,000.
  • Even less expensive cities register meaningful savings. In Detroit, a low median home price of $150,000 and narrow spread of 45 points still adds up to $14,729 in lifetime interest savings.
  • Individual borrower results will vary. LendingTree’s method uses median values, so half of borrowers would see smaller savings.
  • But, just as important, 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 offers.

Where purchase borrowers face the largest differences in mortgage rates

Cincinnati

Purchase Mortgage Rate Competition Index: 0.64

With a median home price of $169,100, borrowers here could save $67 in monthly payments, adding up to $798 a year. Lifetime interest savings would be $23,672.

Houston

Purchase Mortgage Rate Competition Index: 0.61

With a median home price of $233,900, borrowers here could save $88 in monthly payments, adding up to $1,053 a year. Lifetime interest savings would be $31,217.

San Antonio

Purchase Mortgage Rate Competition Index: 0.58

With a median home price of $220,700, borrowers here could save $78 in monthly payments, adding up to $941 a year. Lifetime interest savings would be $27,918.

Where purchase borrowers could save the most in lifetime interest expense

San Francisco

Lifetime interest savings: $99,544

An index of 0.51 and median home price of $900,000 adds up to savings of $280 in monthly payments, totaling $3,357a year.

San Diego

Lifetime interest savings: $75,330

An index of 0.57 and median home price of $607,000 adds up to savings of $212 in monthly payments, totaling $2,540 a year.

Los Angeles

Lifetime interest savings: $72,558

An index of 0.56 and median home price of $595,100 adds up to savings of $204 in monthly payments, totaling $2,447 a year.

Where refinance borrowers face the largest differences in refinance mortgage rates

Bakersfield, Calif.

Refinance Mortgage Rate Competition Index: 0.81

With a median home price of $234,000, borrowers here could save $116 in monthly payments, adding up to $1,389 a year. Lifetime interest savings would be $41,163.

Oklahoma City

Refinance Mortgage Rate Competition Index: 0.72

With a median home price of $158,800, borrowers here could save $70 in monthly payments, adding up to $839 a year. Lifetime interest savings would be $24,893.

Detroit

Refinance Mortgage Rate Competition Index: 0.72

With a median home price of $150,000, borrowers here could save $66 in monthly payments, adding up to $788 a year. Lifetime interest savings would be $23,383.

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