Mortgage rates have fallen to record lows, and low APRs are helping potential home buyers and refinancers net even more savings to their monthly payments. The average annual percentage rate offered to borrowers looking to purchase a home dropped by 17% over the past year, from April 2019 compared to April 2020.
The APR reflects the true cost of borrowing by including the interest rate, points, and fees charged by a lender. As such, it is higher than the quoted interest rate when obtaining a mortgage.
Some markets have seen larger declines in APRs. LendingTree recently ranked the nation’s 50 largest metros by their annual declines in both purchase and refinance APRs.
Home buyers in San Jose, Calif.; Nashville, Tenn.; and Cleveland saw the largest decline in APRs since 2019, according to the study.
1. San Jose, Calif.
- Average APR – April 2019: 4.75%
- Average APR – April 2020: 3.70%
- Percent decline from April 2019 to April 2020: 22.04%
2. Nashville, Tenn.
- Average APR – April 2019: 4.72%
- Average APR – April 2020: 3.69%
- Percent decline from April 2019 to April 2020: 21.8%
3. Cleveland
- Average APR – April 2019: 4.94%
- Average APR – April 2020: 3.88%
- Percent decline from April 2019 to April 2020: 21.56%
Source: “LendingTree Finds Average APRs Offered to All Borrowers Fell During COVID-19 Crisis,” LendingTree (May 5, 2020)
