For many prospective homebuyers, high mortgage rates are putting a damper on the dream of homeownership.
However, a new study suggests that many borrowers are missing out on huge savings by failing to comparison shop among different mortgage lenders. The LendingTree analysis suggests that the average borrower could save $76,410 over the life of a 30-year loan by shopping around for the best rate.
“Different lenders have different standards and criteria that they look at when deciding who to lend to,” says LendingTree senior economist Jacob Channel. “It’s for that reason that different lenders can offer such drastically different rates to the exact same people. And, by extension, it’s also why shopping around for a lender can help homebuyers save so much money.”
According to the study, the lifetime savings of shopping around for the best mortgage rate exceed $100,000 in five states: California ($131,190), New Jersey ($127,125), Hawaii ($115,947), Washington ($115,026), and Minnesota ($103,555).
Still, the benefits of comparison shopping extend to every state. Even in South Dakota, where the savings are the lowest, borrowers would still save more than $35,000 over their loan’s lifetime by shopping around for a mortgage, LendingTree said.
The new report is based on data from 34,000 LendingTree users who received two or more offers from mortgage lenders in 2024. The savings reflect the average difference between the highest and the lowest rates offered to those borrowers.
On a standard 30-year fixed mortgage, even a small difference in interest rates can translate to a large amount of money over the life of the loan. For example, on a loan amount of $300,000, increasing the mortgage rate from 7% to 7.1% adds about $7,270 in interest payments over the life of a 30-year loan.
Average rates on 30-year fixed mortgages stood at 7.03% for the week ending on May 30, according to Freddie Mac. Over the past year, rates have ranged from 6.6% to 7.79%, according to the mortgage buyer.
LendingTree found that nationwide, the spread between the highest and lowest mortgage rates offered to borrowers with multiple offers averaged 0.92 percentage points. Minnesota had the largest spread between the highest and lowest rates, at 1.46 percentage points.
As well, borrowers in Nebraska and Wisconsin saw significant spreads in the rates of offer from different lenders. The difference between the highest and lowest rate offers averaged 1.38 percentage points in Nebraska and 1.35 percentage points in Wisconsin.