Buying a house has become increasingly expensive in recent years. Home prices have gone through the roof and interest rates on mortgages have increased significantly from the historic lows we saw during the COVID-19 pandemic. The average mortgage interest rate has stayed above 6% on 30-year fixed mortgages during 2025, but has managed to dip lower for 15-year fixed loans. The average interest rate varies widely by state, too.
Fortunately, the average mortgage interest rate decreased across all states from Q1 2025 to Q2 2025. In order to highlight the states where homeowners' financial burdens are getting lighter, WalletHub compared the 50 states based on our proprietary user data on mortgage interest rates.
Chip Lupo, WalletHub Analyst
Main Findings
States Where Mortgage Interest Rates are Decreasing the Most
|
Overall Rank* |
State |
Average Mortgage Rate in Q2 2025 |
Change in Average Mortgage Rate (Q2 2025 vs. Q1 2025) |
|---|---|---|---|
| 1 | Alabama | 4.82% | -16.65% |
| 2 | Mississippi | 5.35% | -16.47% |
| 3 | Iowa | 5.46% | -16.35% |
| 4 | Indiana | 5.06% | -16.34% |
| 5 | Ohio | 5.54% | -15.91% |
| 6 | Delaware | 4.65% | -15.80% |
| 7 | Arkansas | 4.98% | -15.73% |
| 8 | New Mexico | 5.13% | -15.18% |
| 9 | Louisiana | 5.96% | -14.88% |
| 10 | North Carolina | 5.02% | -14.36% |
| 11 | Idaho | 4.35% | -14.24% |
| 12 | Nebraska | 6.50% | -14.20% |
| 13 | Missouri | 5.51% | -14.13% |
| 14 | Kentucky | 5.11% | -14.07% |
| 15 | Arizona | 4.56% | -13.86% |
| 16 | South Carolina | 4.88% | -13.85% |
| 17 | North Dakota | 5.16% | -13.75% |
| 18 | Kansas | 6.35% | -13.58% |
| 19 | Oklahoma | 5.90% | -13.45% |
| 20 | West Virginia | 4.58% | -13.29% |
| 21 | Nevada | 4.61% | -13.28% |
| 22 | Pennsylvania | 5.47% | -13.28% |
| 23 | Tennessee | 4.79% | -13.08% |
| 24 | Maine | 5.13% | -13.07% |
| T-25 | Alaska | 5.15% | -12.95% |
| T-25 | Michigan | 5.37% | -12.95% |
| 27 | Virginia | 5.16% | -12.91% |
| 28 | South Dakota | 5.59% | -12.85% |
| 29 | Montana | 5.38% | -12.52% |
| 30 | Utah | 4.54% | -11.76% |
| 31 | Oregon | 4.96% | -11.15% |
| 32 | Maryland | 5.51% | -11.12% |
| 33 | Illinois | 6.20% | -10.82% |
| 34 | Minnesota | 5.58% | -10.72% |
| 35 | Georgia | 5.67% | -10.62% |
| 36 | Colorado | 5.27% | -10.52% |
| 37 | Florida | 6.20% | -10.45% |
| 38 | New Hampshire | 6.37% | -10.36% |
| 39 | Washington | 5.34% | -10.30% |
| 40 | Wyoming | 4.98% | -10.07% |
| 41 | Rhode Island | 5.78% | -9.87% |
| 42 | California | 4.56% | -9.42% |
| 43 | Connecticut | 6.48% | -9.30% |
| 44 | Massachusetts | 5.73% | -9.07% |
| 45 | New York | 6.25% | -9.05% |
| 46 | Hawaii | 4.48% | -8.87% |
| 47 | New Jersey | 6.85% | -8.86% |
| 48 | Wisconsin | 5.03% | -8.43% |
| 49 | Texas | 6.44% | -7.71% |
| 50 | Vermont | 5.38% | -6.73% |
Note: *No. 1 = Largest Decrease
In-Depth Look at the States Where Mortgage Interest Rates Are Decreasing the Most
Alabama
Alabama had the largest decrease in the average mortgage interest rate between Q1 2025 and Q2 2025, at around 16.7%.
With this significant decrease, the average mortgage rate in Alabama dropped to only 4.8% in Q2 2025, making it the 10th-cheapest state. In addition, Alabama already ranks 12th among the states where mortgage delinquency is decreasing the most. On the other hand, it ranks 21st among the states adding the most mortgage debt, suggesting that while homeowners are catching up on payments, many are also taking on new financial risks.
Mississippi
Mississippi experienced the second-largest decrease in the average mortgage interest rate between Q1 2025 and Q2 2025, at 16.5%.
Despite the large decrease, as of Q2 2025, the average mortgage interest rate in Mississippi was 5.4%, the 25th-most expensive rate in the country. On the flip side, Mississippi residents are beginning to catch up on payments, with the state ranking 24th among the states where mortgage delinquency is decreasing the most. In addition, Mississippi ranks only 39th among the states adding the most mortgage debt, indicating that while progress is being made on existing obligations, new borrowing remains relatively limited.
Iowa
In Iowa, the average mortgage interest rate decreased by 16.4% between Q1 2025 and Q2 2025, the third-largest decrease in the country. This brought the average mortgage interest rate down to around 5.5%, the 21st-highest average in the country. For comparison, average interest rates in other states range from around 4.4% to 6.9%.
Although there was a decrease, because of Iowa’s relatively high interest rates, it’s not surprising that it ranks only 42nd among the states where mortgage delinquency is decreasing the most. The upside is that residents are not taking on significant new financial risks, as Iowa ranks only 42nd among the states adding the most mortgage debt.
Methodology
To determine the states where mortgage interest rates are decreasing the most, we analyzed WalletHub’s proprietary user data on mortgage interest rates from Q1 2025 to Q2 2025.
Sources: Data used to create this ranking were collected from WalletHub database.
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