State-Level Mortgage Rates Fall Sharply, Offering Relief to Select Homebuyers

Homebuyers sitting on the sidelines have been seeing federal mortgage rates hovering above 6%, but the good news is—depending on what state you live in—you may find lower rates.

The current interest rate for a 30-year fixed mortgage is 6.3% for the week ending Sept. 25, according to Freddie Mac.

Mortgage rates decreased in every state from the first to the second quarter of 2025, according to a new proprietary data report from WalletHub.

In most of the states, the decrease was significant. It was double digits in 40 states, with the highest decreases concentrated in the South and Midwest, indicating that the more in-demand coastal and Northeast states don't need to goose sales.

"The rankings suggest lenders in lower-cost housing markets are cutting rates more aggressively to encourage activity," WalletHub analyst Chip Lupo tells Realtor.com®.

"For buyers, that means lower monthly payments in areas where homes are already cheaper than in coastal markets, making these regions especially attractive right now."

Why mortgage rate cuts are welcome

The historically high national median home list price for August was $429,990, leading to a "cruel summer" with the market on track for one of the worst years for sales in three decades.

Combine high prices with mortgage rates well above the 2% to 4% rates that buyers became accustomed to during the COVID-19 pandemic era, and people aren't inclined to buy.

The average rate on 30-year fixed home loans increased to 6.3% for the week ending Sept. 25, up from 6.26% the week before, according to Freddie Mac. These are slightly up from the 6.08% rate during the same period in 2024.

But the state where you're home shopping can make a big difference. Interest rates in all states range from around 4.4% to 6.9%, according to WalletHub.

The lowest rate in the country was in Idaho, at 4.35%; the highest was in New Jersey, at 6.85%. However, all 50 states have seen drops.

While Vermont didn't get much relief, coming in dead last in the country with an average mortgage rate decrease of 6.73% from the first to the second quarter, Alabama can rejoice.

The state took the No. 1 spot with the highest decrease—16.65%—bringing its average rate to a near-pandemic era low of 4.82%, down from 5.78% in the first quarter.

Combined with Alabama's below-median list price, the state looks attractive for buyers.

Here are the top 10 states with the largest mortgage rate decreases, according to WalletHub:

1. Alabama

Decrease of 16.65%

Average rate: 4.48%

Median home list price: $335,000

While Alabama is now the 10th-cheapest state with this new decrease, it also ranks 21st among the states adding the most mortgage debt, "suggesting that while homeowners are catching up on payments, many are also taking on new financial risks," the report states.

2. Mississippi

Decrease of 16.47%

Average rate: 5.35%

Median home list price: $295,000

Despite coming in second, this Southern state still has the 25th-most expensive rate in the country.

"On the flip side, Mississippi residents are beginning to catch up on payments, with the state ranking 24th among the states where mortgage delinquency is decreasing the most," says the report.

As for adding mortgage debt, Mississippi ranks only 39th, meaning that "while progress is being made on existing obligations, new borrowing remains relatively limited," says the report.

3. Iowa

Decrease of 16.35%

Average rate: 5.46%

Median home list price: $285,000

Iowa has the third-biggest decrease in the country, but its overall average rate is still 5.5%, the 21st highest rate in the U.S.

"Because of Iowa’s relatively high interest rates, it’s not surprising that it ranks only 42nd among the states where mortgage delinquency is decreasing the most," says the report. Iowans are not taking on significant new financial risks, ranking only 42nd among states adding the most mortgage debt.

4. Indiana

Decrease of 16.34%

Average rate: 5.06%

Median home list price: $299,900

5. Ohio

Decrease of 15.91%

Average rate: 5.54%

Median home list price: $289,900

6. Delaware

Decrease of 15.80%

Average rate: 4.65%

Median home list price: $480,000

7. Arkansas

Decrease of 15.73%

Average rate: 4.98%

Median home list price: $305,000

8. New Mexico

Decrease of 15.18%

Average rate: 5.13%

Median home list price: $404,950

9. Louisiana

Decrease of 14.88%

Average rate: 5.96%

Median home list price: $279,000

10. North Carolina

Decrease of 14.36%

Average rate: 5.02%

Median home list price: $419,900