Img 7437 2 Scaled E1758817455872 — Neighborhood street in Tuscaloosa (The Bama Buzz)

Buying a house seems to be more and more difficult with each passing year but some slightly good news for those of us here in Alabama is seeing the mortgage interest rates falling.

Between Q1 and Q2 of 2025, the average mortgage rate dropped 16.65% in Alabama. That was the largest percentage drop of any state in the country, according to a recent study from WalletHub.

The report says the average mortgage interest rate across Alabama in Q2 was 4.82%, which ranks 10th among all states.

“It’s a difficult time to buy a house, given that home prices have risen astronomically over the past few years and housing shortages make it hard to find the right place even if you have the money. The upside is that consumers’ home-buying struggles are alleviated by the fact that the average mortgage interest rate decreased in all states between Q1 2025 and Q2 2025. Although interest rates are still down a bit from the highs we saw two years ago, they’re a far cry from the historic lows during the pandemic.”
Chip Lupo, WalletHub analyst

Overall, the report shows the trend of declining mortgage interest rates is offering at least some relief to homeowners across the country.

Market in Alabama

E6979C4F 9A52 435D 95D7 7Ed74B2C23B0 — “house for sale by owner” by Images_of_Money is licensed under CC BY 2.0

In 2023, the average interest rate in Alabama peaked around 7.8% but has consistently fallen each quarter since then.

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.

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