Understanding Mortgage Rates: What Moves Them & How to Get a Better Rate
Mortgage rates seem to change daily, yet most people don't know what actually drives them. The Fed? Inflation? Your credit score? All of the above — but in different ways. Understanding what moves rates helps you time your lock and negotiate a better deal.
The 10-Year Treasury: The True Benchmark
Mortgage rates don't follow the Federal Funds Rate directly — they track the 10-year US Treasury bond yield. When bond investors expect more inflation or economic growth, they demand higher yields, and mortgage rates follow.
This is why mortgage rates often move before the Fed acts. Bond markets are forward-looking. When inflation expectations rise, the 10-year Treasury yield rises, and 30-year fixed mortgage rates typically move in the same direction — usually 1.5–2% above the 10-year Treasury.
What Moves Rates Day-to-Day
| Factor | How It Affects Rates | Impact Level |
|---|---|---|
| Inflation Data (CPI, PCE) | High inflation → rates go up. Low inflation → rates fall. | 🔴 High impact |
| Fed Policy Signals | Hawkish tone (fighting inflation) → rates up. Dovish → rates down. | 🔴 High impact |
| Jobs Reports (Non-Farm Payroll) | Strong jobs → rates up. Weak jobs → rates down. | 🟡 Medium impact |
| Mortgage-Backed Securities (MBS) | When MBS prices fall, mortgage rates rise (inversely related). | 🔴 High impact |
| Geopolitical Events | Risk-off events → investors buy Treasuries → rates fall. | 🟡 Variable impact |
| Housing Market Data | Strong demand can push spreads wider (rates higher). | 🟢 Lower impact |
Your Personal Rate: What You Control
The rate you're quoted is not just the market rate — it's adjusted based on your specific risk profile. Here's what lenders use to price your rate:
- →Credit Score: The single biggest factor. Each tier jump (620→640→680→720→740→760+) can save 0.25–0.50% in rate.
- →Loan-to-Value (LTV): The less you borrow relative to home value, the lower the rate. 80% LTV or below often qualifies for the best pricing.
- →Loan Type: FHA/VA carry agency guarantee fees that push effective rates higher. Conventional typically prices better above 680 credit.
- →Loan Size: Jumbo loans (above $766,550) carry slightly higher rates due to greater lender risk.
- →Points and Fees: You can 'buy down' your rate by paying discount points upfront (1 point = 1% of loan amount). Worth it if you stay long-term.
5 Ways to Get a Lower Rate
- 1Improve your credit score before applying: Pay down revolving balances below 30% utilization. Each 20-point jump can lower your rate.
- 2Put more down: Moving from 5% to 20% down typically saves 0.25–0.5% in rate and eliminates PMI.
- 3Buy points strategically: If you're staying 7+ years, paying 1–2 points to buy down your rate often makes financial sense.
- 4Shop multiple lenders: Studies show borrowers who get 3–5 quotes save an average of $1,500 over the loan term. Tiger Loans will compete to earn your business.
- 5Time your lock carefully: If rates are trending down, a floating lock lets you capture improvements. If volatile, lock immediately after going under contract.
Rate Lock Strategy
A rate lock guarantees your interest rate for a specific period (typically 30–60 days) while your loan processes. Here's how to think about it:
Understanding APR vs. Interest Rate
Your interest rate is what you pay on the borrowed balance. APR (Annual Percentage Rate) includes the rate plus fees — origination, points, broker fees. APR gives you a more complete picture of total loan cost.
When comparing lenders, compare APR, not just rate. A 6.75% rate with high fees may be more expensive than 6.875% with low fees.
Get Today's Rate — Personalized for You
Your rate depends on your credit, down payment, and loan type. Get an actual quote from Tiger Loans in minutes.
Get My Rate Quote*Rate examples are illustrative. Actual rates vary daily and are based on individual borrower qualifications. Tiger Loans, Inc. NMLS #1169300.