Alabama Sees Biggest Drop in Mortgage Rates in the Nation
Source: WalletHub

Alabama-A new study from personal-finance company WalletHub shows that mortgage interest rates decreased across all 50 states between the first and second quarters of 2025, with Alabama seeing the largest drop in the country.

https://wallethub.com/edu/states-mortgage-interest-rates-change/141339

According to the report, Alabama’s average mortgage interest rate fell by about 16.7% from Q1 to Q2, bringing the average down to 4.82%. That puts Alabama 10th in the nation for lowest average mortgage rates. The state also ranks 12th in decreasing mortgage delinquency, though it comes in 21st for adding new mortgage debt—suggesting homeowners are catching up on payments while still taking on new financial obligations.

Mississippi ranked second, with a 16.5% decrease in average mortgage interest rates. As of Q2, the state’s average rate stood at 5.4%, making it the 25th-most expensive rate in the nation. The report notes that Mississippi is seeing progress in reducing delinquency but remains among the bottom states for adding new mortgage debt.

Iowa came in third, with a 16.4% decrease in average mortgage rates, bringing its Q2 average down to 5.5%. While the decrease was significant, Iowa still has one of the higher average rates in the country. The state ranks low in reducing delinquency but is also not among those rapidly adding mortgage debt.

Overall, WalletHub’s analysis shows that the nationwide trend of declining mortgage interest rates is offering some relief to homeowners. Rates still vary widely, ranging from around 4.4% to nearly 7% depending on the state.

Methodology: WalletHub’s findings are based on proprietary user data, comparing average mortgage interest rates in all 50 states between Q1 and Q2 of 2025.