Mortgage rates follow the bond market, especially the yield on 10-year Treasury notes, plus a spread that reflects investor demand for mortgage-backed securities and lenders’ costs. The Federal Reserve influences them indirectly through inflation and the economy. Then your personal rate is adjusted for your credit score, down payment, loan type, property type and any points you pay.
The market part
- 10-year Treasury yields: 30-year mortgage rates tend to move with them, because most mortgages are paid off or refinanced within about 10 years.
- The spread: the gap between mortgage rates and Treasuries, historically around 1.5 to 2 percentage points, wider when markets are volatile.
- Inflation expectations: higher expected inflation pushes rates up.
- The Federal Reserve: it sets short-term rates, not mortgage rates, but its decisions and outlook move bond markets.
- Economic news: strong jobs or inflation reports often push rates up the same day.
Your part
| Factor | Effect on your rate |
|---|---|
| Credit score | Higher scores get better pricing, in steps of roughly 20 points |
| Down payment / LTV | More equity, better pricing |
| Loan type and term | 15-year loans are cheaper than 30-year; FHA and VA price differently |
| Property and occupancy | Condos, multi-unit homes, second homes and investments cost more |
| Points and lock length | Points lower the rate; longer locks can raise it |
| Cash-out | Higher than a purchase or rate-and-term refinance |
What this means for you
You can’t control the market, but you can control your side: raise your score (see the credit score cost calculator), put more down, and shop lenders, since their margins differ; see why lenders quote different rates. To see how much rate swings matter for your budget, try the rate sensitivity tool.
Trying to time the market is hard; buy when the home and payment are right, and refinance if rates fall enough; see when to refinance.
Common questions
Does the Fed set mortgage rates?
No. The Fed sets short-term rates; mortgage rates follow longer-term bond yields, which react to the Fed’s outlook.
Why do mortgage rates follow the 10-year Treasury?
Most mortgages are paid off or refinanced within about 10 years, so investors compare them with 10-year Treasuries.
What can I do to get a lower rate?
Raise your credit score, put more down, consider points, and compare several lenders.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.