Preparing to buy a house? Call us for a complimentary mortgage consultation.
Compare mortgage rates in Pennsylvania.
Key Points
• Pennsylvania mortgage rates typically follow national trends, sometimes a little higher or lower.
• Factors affecting mortgage rates in Pennsylvania include economic conditions, consumer behavior, and government policy.
• Many types of mortgages are available in Pennsylvania, from fixed-rate to adjustable-rate mortgages (ARMs), and low-cost government-backed loans to jumbo loans for higher-priced properties.
• Tips for securing a competitive mortgage rate in Pennsylvania: Compare interest rates and fees, get preapproved, improve your credit score, make a larger down payment, keep debt-to-income ratio low, shop around with multiple lenders, and consider discount points.
• Pennsylvania offers resources and programs to assist homebuyers and homeowners, including first-time homebuyer programs and down payment assistance.
Introduction to Mortgage Interest Rates
Mortgage rates play an unsung role in determining the affordability of homeownership. Even small fluctuations in interest rates can significantly impact a borrower’s monthly payments and overall financial burden.
Mortgage interest rates are determined by a complex interplay of factors. These can be broadly categorized into two groups: the state of the economy and the borrower’s financial status.
Understanding these factors and their impact on mortgage rates can help borrowers make informed decisions and secure the best possible rate for their home loan.
Where Mortgage Rates Come From
The Federal Reserve, commonly known as the Fed, plays a central role in setting short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates. When the Fed’s interest rate is high, chances are mortgage rates will be too — and vice versa.
Experts recommend that borrowers stay informed about the Fed’s monetary policy decisions, as they can have a significant impact on mortgage rates.
How Interest Rates Affect Home Affordability
Mortgage rates have a more substantial impact on home affordability than many people realize. Even minor changes in interest rates can significantly affect monthly mortgage payments and the overall cost of borrowing.
For instance, a mere 1.00% interest rate increase on a $300,000 loan can result in an additional $2,300 in annual interest payments. Over the life of a 30-year mortgage, this translates to a staggering $69,000 in additional interest paid.
As a result, mortgage rates can make a significant difference in whether homeownership is financially feasible for middle-income families.
Should Homebuyers Wait for Interest Rates to Drop?
Many first-time homebuyers grapple with the dilemma of whether to purchase a home immediately or wait for interest rates to decrease. While it is tempting to try to “time the market,” it is essential to consider several factors before making a decision.
First, mortgage rates are notoriously difficult to predict. While rates may indeed decline in the future, there is no guarantee of when or by how much.
Second, even if rates do drop, the overall cost of waiting may outweigh the savings. Home prices tend to appreciate over time, offsetting any potential savings from lower interest rates. Additionally, waiting may mean missing out on the opportunity to build equity and enjoy homeownership.
Pennsylvania Mortgage Rate Trends
Understanding historical mortgage rate trends can provide valuable insight into where rates are headed. While Pennsylvania rates have risen in recent years, along with the national rates, they remain below historical highs. Indeed, they’re currently around the 50-year average.
For instance, in the two decades covered by the table below, rates ranged from a high of 7.97% in 2000 to a low of 3.65% in 2012, making the average for that period 5.30%.
This perspective offers some reassurance to prospective homebuyers (especially if you’re buying your first home), indicating that current rates are not exceptionally high in the grand scheme of mortgage history.
However, it’s always wise to monitor market conditions and stay informed about economic developments that could influence future rate trends.
| Year | Pennsylvania Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.97 | 8.14 |
| 2001 | 7.00 | 7.03 |
| 2002 | 6.53 | 6.62 |
| 2003 | 5.78 | 5.83 |
| 2004 | 5.85 | 5.95 |
| 2005 | 6.02 | 6.00 |
| 2006 | 6.49 | 6.60 |
| 2007 | 6.31 | 6.44 |
| 2008 | 6.04 | 6.09 |
| 2009 | 5.16 | 5.06 |
| 2010 | 4.85 | 4.84 |
| 2011 | 4.59 | 4.66 |
| 2012 | 3.65 | 3.74 |
| 2013 | 3.90 | 3.92 |
| 2014 | 4.20 | 4.24 |
| 2015 | 3.96 | 3.91 |
| 2016 | 3.76 | 3.72 |
| 2017 | 4.07 | 4.03 |
| 2018 | 4.58 | 4.57 |
Historical U.S. Mortgage Rates
For additional context, it is worth noting that mortgage rates in the United States have experienced even greater fluctuations over the past 50 years. In the early 1980s, rates reached historic highs, exceeding 18.00%. Subsequently, rates declined steadily until the early 2000s, when they hovered around 6.00%. The financial crisis of 2008 triggered another spike in rates, followed by a gradual decline until the present day.
Factors Affecting Mortgage Rates in Pennsylvania
Numerous factors influence mortgage rates in Pennsylvania and nationwide. Some of these are what’s called macroeconomic, while others are microeconomic — and entirely within the homebuyer’s control.
Macroeconomic, or Big Picture, factors include the federal funds rate, inflation, and the unemployment rate. Microeconomic, or individual, factors can encompass your credit score, down payment amount, income and assets, and mortgage type.
Getting familiar with these influences can empower homebuyers to make informed decisions and position themselves for the best possible mortgage rate.
Macro Factors
• The Fed: The Federal Reserve sets the federal funds rate, a benchmark for banks. As the federal funds rate rises, mortgage rates tend to follow suit.
• Inflation: Inflation, or the general increase in prices, affects the cost of borrowing for lenders. When inflation is high, lenders may increase interest rates to maintain their profit margins.
• Unemployment: A low unemployment rate, indicative of a robust economy, can lead to higher mortgage rates due to increased demand for housing and upward pressure on home prices.
Micro Factors
• Credit score: A higher credit score reflects a borrower’s responsible financial behavior and lower risk profile. Lenders reward such borrowers with lower interest rates.
• Down payment: A larger down payment reduces the loan amount, making the borrower less risky in the eyes of lenders. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.
• Income and assets: A stable income and substantial assets demonstrate a borrower’s ability to repay the loan, making them more attractive to lenders and potentially securing a lower interest rate.
• Type of mortgage loan: The type of mortgage loan chosen can also impact the interest rate. Adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate mortgages. Government-backed loans, such as VA mortgages, may also offer more-favorable rates. Additionally, 15-year loan terms typically come with lower interest rates than 30-year terms.
Types of Mortgages Available in Pennsylvania
Pennsylvania offers a variety of mortgage types to meet the needs of different homebuyers, including:
Fixed-Rate Mortgage
A fixed-rate mortgage provides peace of mind with a consistent interest rate for the entire loan term. Borrowers can lock in a favorable rate and enjoy predictable monthly payments, making budgeting and financial planning easier.
Fixed-rate mortgages are typically available in terms ranging from 10 to 30 years, allowing borrowers to choose a loan duration that aligns with their financial goals and repayment capacity.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages offer lower rates initially but come with future rate adjustments, which can go up or down depending on the market.
ARMs entice borrowers with lower introductory rates, making them an attractive option for those seeking immediate savings. However, borrowers should carefully consider the potential for future rate increases and ensure they are prepared to handle higher monthly payments if rates adjust upward.
FHA Loan
FHA loans are backed by the federal government, making them more accessible to borrowers who may not qualify for conventional loans due to lower credit scores or higher debt-to-income ratios. The FHA insures these loans, reducing the risk for lenders and allowing them to offer more favorable terms to borrowers.
FHA loans do require an upfront mortgage insurance premium (MIP), which is a percentage of the loan amount. Monthly MIP for new homebuyers is 0.15% to .75% — most often 0.55%.
VA Loans
VA loans offer exceptional benefits, including no down payment requirement, to eligible veterans, active-duty military members, certain Reserve and National Guard members, and eligible spouses.
There’s no ongoing mortgage insurance as with a conventional mortgage; however, there may be a one-time funding fee. A first-time VA loan borrower with a 0% down payment would pay a 2.15% funding fee.
USDA Loans
Backed by the U.S. Department of Agriculture, USDA loans cater to low-income borrowers seeking to purchase homes in rural areas. They offer such benefits as no down payment, competitive interest rates, and flexible credit requirements.
Jumbo Loan
Jumbo loans cater to borrowers seeking financing for high-value properties that exceed conventional loan limits. The loan limit throughout most of Pennsylvania is $766,550. The one exception is Pike County, where the limit is $1,149,825. For loans above those limits, you’ll need a jumbo mortgage.
Popular Places to Get a Mortgage in Pennsylvania
Securing a mortgage often depends on choosing the right location, where home prices, the overall cost of living, and mortgage terms are affordable.
When selecting a location, it’s smart to research the cost of living, as it can significantly impact overall financial well-being. The Cost of Living Index (COLI) provides a valuable tool for comparing different states, or different cities within a state. Index values above 100 indicate that the area is more expensive than the average cost of living in the U.S.. Values below 100 mean that the area is more affordable than average.
Below are some popular locations in Pennsylvania for obtaining a mortgage, along with their Cost of Living Index number:
• Philadelphia: COLI 104.3
• Pittsburgh: COLI 91.8
• Allentown: COLI 97.9
• Erie: COLI 80.8
• Reading: COLI 94.0
Least Expensive Locations
The following areas in Pennsylvania offer relatively lower cost of living, according to SoFi’s Best Affordable Places to Live in the U.S. guides:
• Johnstown: COLI 75.7
• Altoona: COLI 77.2
• State College: COLI 95.4
• Williamsport: COLI 85.0
• Scranton: COLI 83.6
Most Expensive Locations
The following areas in Pennsylvania have higher cost of living but greater local amenities and cultural attractions:
• Philadelphia: COLI 104.3
• Pittsburgh: COLI 91.8
• Allentown: COLI 97.9
• Harrisburg: COLI 89.8
• Lancaster: COLI 99.5
Recommended: Average Monthly Expenses for One Person
Tips for Securing a Competitive Mortgage Rate in Pennsylvania
As we’ve shown above, obtaining a competitive mortgage rate can save borrowers tens of thousands of dollars over the life of their loan. Even a small difference in interest rate can result in substantial savings or added costs over time.
Therefore, it’s important to do whatever you can to secure the best available mortgage rate. Here are some tips:
Compare Interest Rates and Fees
Take the time to compare rates and fees from multiple lenders. Don’t settle for the first offer you receive. By comparing rates, you can potentially save thousands of dollars over the life of your loan.
In addition to interest rates, be sure to inquire about any upfront costs or closing fees associated with the loan. These fees can vary between lenders and can add to the overall cost of borrowing.
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. Preapproval involves submitting financial documents and undergoing a credit check to assess your eligibility for a mortgage.
If you are concerned about interest rates, you can lock in your rate for a certain period, typically ranging from 30 to 90 days, by paying a fee to the lender. This can provide peace of mind and protect you from potential rate increases.
From soup to nuts, the mortgage preapproval process takes up to 10 days.
Pennsylvania Mortgage Resources
The Pennsylvania Housing finance Agency (PHFA) offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. These resources include down payment assistance programs, mortgage assistance.
• HomeFirst Down Payment Assistance Program provides a 30-year fixed-rate conventional loan with a reduced mortgage insurance requirement. Qualifications include income limits, an “acceptable” credit history, and completion of homebuyer education. Find participating lenders here.
• Keystone Home Loansoffers mortgages to first-time and repeat buyers purchasing in a targeted county. Qualifications include income and purchase price limits and an “acceptable” credit history. Find info on Keystone here.
• HOMEstead Down Payment and Closing Cost Loan offers up to $10,000 in down payment and closing cost assistance through a no-interest second mortgage, forgiven after five years. Income and purchase price limits apply. More info on HOMEstead.
Tools & Calculators
Numerous tools and calculators are available to help homebuyers estimate their monthly mortgage payments and determine how much they can afford to borrow:
Run the numbers on your home loan.
-
Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
-
Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
-
Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Pennsylvania
A mortgage refinance is when you pay off your current home loan with a new mortgage, typically with more favorable terms. Refinancing can be a strategic move to reduce monthly payments, consolidate debt, or access cash for other financial needs.
Homeowners in Pennsylvania have several options for refinancing their existing mortgages:
• FHA Streamline Refinance: This program allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle
• VA Interest Rate Reduction Refinance Loans: This program allows VA loan holders to reduce their monthly payments by adjusting the APR.
• Conventional refinance loans:Conventional refinance loans are available to homeowners who do not have FHA or VA loans.
Closing Costs, Taxes, and Fees in Pennsylvania
Buyers in Pennsylvania can expect to pay between 2% and 5% of the home’s purchase price in closing costs. Closing costs in Pennsylvania typically include:
• Loan origination fee
• Appraisal fee
• Credit report fee
• Title insurance
• Recording fee
• Transfer tax
• Mortgage tax
The amount of closing costs can vary depending on the value of the property and the location. It’s a smart move to budget for these costs when purchasing a home.
The Takeaway
Pennsylvania’s mortgage landscape offers a range of options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in the Keystone State.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
Will mortgage rates drop in Pennsylvania?
Predicting future mortgage rate trends is challenging, as they are influenced by various economic factors. However, borrowers can stay informed about market conditions and consider locking in a favorable rate for peace of mind.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates varies over time. While rates may fluctuate, they’re currently around the 50-year average.
Will Pennsylvania home prices ever drop?
Real estate market dynamics, including home price trends, are influenced by numerous factors such as supply and demand, economic conditions, and local market characteristics. Predicting future price movements can be challenging and uncertain.
Is it a good time to buy a house in Pennsylvania?
Determining the right time to purchase a home involves considering personal financial readiness, market conditions, and long-term goals. There is no one-size-fits-all answer, and individuals should consult with financial experts and carefully evaluate their circumstances before making a decision.
How to lock in a mortgage rate?
Borrowers can lock in a mortgage rate by paying a fee to the lender. This locks the interest rate for a specified period, typically ranging from 30 to 90 days, protecting against potential rate increases during that time.
How do mortgage interest rates work?
Mortgage interest rates are determined by a combination of economic factors, including the federal funds rate, inflation, unemployment rate, and consumer factors such as credit score, down payment amount, income, assets, and chosen mortgage type.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOHL-Q324-093
More home loan resources.
-
First-Time Homebuyer Guide
-
First-Time Homebuyer Programs and Loans
-
Mortgage Preapproval Process