I'm not disagreeing with your statement, but "mortgage interest rates are generally agnostic to location" isn't fully true. 'Risk of default' and 'ease of finding a new buyer after a default' are factors in determining the rent one pays on a mortgage, and lenders may use location as a factor in assessing those.

For example, if a bank has to repossess a house in the valley, it will not have much problems finding a new buyer. For a house in Detroit, that likely is different.

That likely doesn't have much effect on deltas in the short term, though, as those factors are relatively stable.