CHARLOTTE, N.C. – May 9, 2018 – LendingTree's Mortgage Rate Competition Index gauges the amount consumers can save by comparing rates when they apply for a mortgage. The index is calculated on a national level to give an indication of the general dispersion of mortgage rates throughout the United States.

The national index is calculated weekly and the city indexes are calculated quarterly. Below are the key findings:

  • Tampa, Kansas City, Portland and New York are the cities where homebuyers saw the biggest rate savings by comparing competing offers. Rates in Tampa had a range of 0.62 followed by Kansas City, Portland and New York at 0.61.
  • California is where "mortgage shopping" saved the most money, in part because the median house costs more. Larger loan sizes fuel savings of $65,030 in San Francisco, $42,659 in Los Angeles and $42,315 in San Diego.
  • Regardless of city, buyers saved money by comparing mortgage products, with significant savings ranging from 0.49 in Tulsa to 0.62 in Tampa.
  • Monthly savings can add up to $254 for borrowers in San Francisco given the median home price of $900,000 – the highest monthly savings found.
  • Even less expensive cities register meaningful savings. In Detroit, a low median home price of $150,000 and narrow spread of 0.54 still add up to $9,952 in lifetime interest savings. Only Tulsa joins Detroit in having savings below $10,000.

LendingTree's method uses median values, so half of borrowers would see smaller savings, but just as importantly, half could see larger savings. However, there is no way for a borrower to know where they fall in this spectrum without shopping around for a mortgage.

Metros where purchase borrowers face the largest differences in mortgage rates:

  • Tampa, Fla.
    Purchase Mortgage Rate Competition Index: 0.62
    With a median home price of $225,000 borrowers here could save $67 in monthly payments adding up to $809 a year. Lifetime interest savings would be $17,291.
  • Kansas City, Mo.
    Purchase Mortgage Rate Competition Index: 0.61
    With a median home price of $197,800 borrowers here could save $59 in monthly payments adding up to $705 a year. Lifetime interest savings would be $15,061.
  • Portland, Ore.
    Purchase Mortgage Rate Competition Index: 0.61
    With a median home price of $276,400 borrowers here could save $82 in monthly payments adding up to $983 a year. Lifetime interest savings would be $21,011.

What drives the difference in the competition index across cities?

Different lenders operate in different parts of the country, and even national lenders have different strategies in different areas. To try and assess the number of lenders in each metro, LendingTree looked at the density of bank branches – the number of bank branches divided by the population. Even though the mortgage market is now almost evenly divided between non-banks and banks, and many loan originations are now online, the distribution of bank branches is still indicative of how competitive financial services are.

The findings revealed that in the refinance market, cities with fewer bank branches had wider spreads in rates. This relationship did not hold for purchase mortgages. Refinance transactions tend to be more price-sensitive, as the loan is the primary product. In a purchase transaction, the loan, though essential, is a secondary product to the home and thus less price (interest rate) sensitive.

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