LendingTree has released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.
- February’s best offers for borrowers with the best profiles had an average APR of 4.22 percent for conforming 30-year fixed purchase loans, up from 3.93 percent in December. Refinance loan offers were up 38 bps to 4.13 percent. Mortgage rates vary dependent upon parameters including credit score, loan-to-value, income and property type.
- For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 25 bps to 4.80 percent. The loan note rate hit the highest since March 2016 at 4.70 percent and was also up 25 bps from January. We prefer to emphasize the APR as lenders often make changes to other fees in response to changing interest rates.
- Consumers with the highest credit scores (760+) saw offered APRs of 4.68 percent in February, vs 4.95 percent for consumers with scores of 680-719. The APR spread of 27 bps between these score ranges was 2 bps narrower than in January but still near the widest since this data series began in April 2016. The spread represents over $14,000 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $240,955. The additional costs are due to higher interest rates, larger fees or a combination of the two.
- Refinance APRs for conforming 30-yr fixed loans were up 31 bps to 4.77 percent. The credit score bracket spread narrowed to 24 from 25 bps, amounting to nearly $13,000 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $244,279.
- Average proposed purchase down payments were little changed at $63,801.
“Mortgage rates increased dramatically in February, continuing the upward trend that started in September and accelerated in January,” said Tendayi Kapfidze, LendingTree’s Chief Economist and report author. “Housing market activity in January began to show some signs of weakness. New home sales fell 7.8 percent M/M, existing home sales fell 3.2 percent and pending home sales fell 4.7 percent to the lowest in almost four years. Rates had risen 13 bps in January and surged 25 bps in February.”
Kapfidze added, “Home sales data for February, to be released in March, will be closely watched for confirmation that mortgage rates are weighing on sales. The good news is that the uptrend in rates has slowed the past two weeks. Homebuyers more than ever need to work to put themselves in the best possible position given the rate rise. Two strategies that we find work well are to improve the credit score and make sure to shop around for the best mortgage rates.”