Better credit profile could have saved borrowers $15K last month

by Steve Randall09 Aug 2018

Homebuyers using lenders on the LendingTree platform could have saved thousands of dollars if their credit profiles had been stronger.

The platform’s monthly Mortgage Offers Reports shows that borrowers with the best profiles had an average APR of 4.31% for conforming 30-year fixed purchase loans, down from 4.34% in June. For refinance loans, offers were down 2 bps to 4.35%.

Meanwhile, those with an average profile saw rates for the same loan types fall 1 basis point to 4.99%. The loan note rate of 4.88% is the lowest since April. LendingTree’s report emphasizes the APR as lenders often make changes to other fees in response to changing interest rates.

Consumers with the highest credit scores (760+) were offered APRs of 4.84%, versus 5.13% for consumers with scores of 680-719. This rate spread was up 2 bps from June and would mean a saving of $15,000 in additional costs for borrowers with lower credit scores over 30 years for the average purchase loan amount of $232,054.

"Our report demonstrates how a credit score can impact a borrower in very tangible terms," said Tendayi Kapfidze, LendingTree's Chief Economist and report author. "As much as people obsess over credit scores, many think of its importance in the binary "approve/decline" paradigm. Few borrowers actually know how their credit score impacts the cost of financial products, and we hope this report increases consumer education."

Purchase Mortgage Offers by Credit Score

Purchase

FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans

4.99%

$58,191

$232,054

82%

$215,808

760+

4.84%

$75,117

$252,185

78%

$208,154

720-759

4.89%

$54,409

$232,766

83%

$210,727

680-719

5.13%

$39,239

$215,726

86%

$222,882

640-679

5.50%

$61,165

$198,748

75%

$242,301

620-639

5.61%

$58,170

$194,733

76%

$248,135

*Lifetime interest paid is calculated based on the overall average loan amount to enable comparison.

 

Refinance Mortgage Offers by Credit Score

Refinance

FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans

4.98%

$0

$238,018

62%

$221,064

760+

4.85%

$0

$244,953

59%

$214,389

720-759

4.91%

$0

$242,762

64%

$217,147

680-719

5.07%

$0

$234,092

64%

$225,901

640-679

5.25%

$0

$219,823

59%

$235,005

620-639

5.39%

$0

$211,655

59%

$242,742

*Lifetime interest paid is calculated based on the overall average loan amount to enable comparison.

 

 


More market update:

Poll

Should CFPB have more supervision over credit agencies?