Mortgage rates climbed in 44 U.S. states during the first half of 2024, leaving homebuyers anxiously awaiting relief. With the Federal Reserve beginning a series of interest rate cuts, the housing market is expected to see some improvement, but for now, homebuyers in most states continue to feel the squeeze.
According to a new analysis from WalletHub, mortgage interest rates increased in all but six states from the first quarter to the second quarter of this year. The data used for this analysis was reported prior to the Federal Reserve’s first interest rate cut in September, which was the first such reduction in over four years. Even before the official cut, rates had already started to ease in anticipation, with declines noted as early as July.
Factors Affecting Mortgage Rates
Several key factors influence mortgage rates, with the bond market and the Federal Reserve’s interest rate policies playing a critical role. These factors often cause significant fluctuations in rates depending on which state you are in. The national average rate on a 30-year mortgage peaked at 7.22% in May 2024. This peak was a high point for many homebuyers, but as the Federal Reserve indicated plans for more cuts through 2025 and even into 2026, mortgage rates are expected to decline over time.
Still, the differences between states remain stark. Colorado, for example, saw the most dramatic increase in mortgage rates between the first and second quarters of this year, with rates rising by about 4.9%. Despite this jump, Colorado’s average mortgage rate of 5.7% still only placed it 29th in terms of the most expensive states for mortgages.
State-by-State Variations
Not every state experienced a rise in mortgage rates. Idaho saw a substantial decrease in mortgage rates, dropping by 1.12%, marking the largest reduction of any state in the country. On the other end of the spectrum, New Jersey had the highest average mortgage rate at 7.37%, while Hawaii recorded the lowest average mortgage rate at 4.81%.
Source: WalletHub
As the Federal Reserve continues its rate-cutting strategy, homeowners and prospective buyers are likely to see mortgage rates decline, easing some of the financial pressures. While these cuts will take time to affect the market fully, the initial reduction in September signals the beginning of lower mortgage rates on the horizon, offering hope for future homebuyers.
For now, the housing market remains constrained by rising rates in most states, leaving many homebuyers facing higher borrowing costs and fewer affordable options.
Click here for more information on WalletHub’s analysis of mortgage interest rates nationwide.
