American homeowners have been told they could save up to $52,000 over the course of a 30-year mortgage if they use the best mortgage lenders , after mortgage rates fell to another all-time low.
According to new analysis from LendingTree, the best mortgage rates on offer can be as much as 1% lower than the worst rates, giving rise to potential savings of thousands of dollars over the lifetime of a loan.
The study looked at the average differences, or spreads, between the highest and lowest annual percentage rates (APRs) offered to the same borrowers on the LendingTree platform in April. APRs were used rather than simple mortgage rates, as an APR combines both interest rates and loan origination fees to give a better indication of the actual cost of a loan over a year.
Using the benchmark of a $250,000 loan over a 30-year term, the analysis found the average APRs offered to borrowers with a credit score of between 680 – 719 ranged from a low of 3.62% to a high of 4.61%. Equating to a spread of almost one percentage point, it was further calculated that opting for the lower rate over the higher rate would save a borrower $51,725 over the lifetime of the loan. Savings in excess of $50,000 could also be made among borrowers with credit scores ranging from 720 to 759, while those with a credit score of 640 – 679 could potentially save $48,699.
|Credit Score Range||Average Lowest Offer||Average Highest Offer||Implied $ Savings on $250,000 Loan (360 Months)|
|Less than 640||3.69%||4.16%||$24,271|
|640 – 679||3.87%||4.79%||$48,699|
|680 – 719||3.62%||4.61%||$51,725|
|720 – 759||3.46%||4.43%||$50,148|