Mortgage rates follow the 10-year Treasury
Conventional 30-year mortgage rates roughly track the yield on the 10-year US Treasury, plus a spread. When investors buy more Treasuries, yields fall — and mortgage rates usually fall with them. When investors sell, yields rise.
How an inflation report moves rates
The Consumer Price Index (CPI) is the inflation report markets watch most closely. When a CPI release comes in hotter than expected, yields tend to rise because investors expect the Fed to stay restrictive. When it comes in cooler, yields tend to fall. Mortgage pricing usually follows within hours.
Why the Fed isn't the whole story
The Fed sets short-term rates (the Fed Funds Rate). Mortgages are long-term loans, so they price off long-term expectations. That's why mortgage rates can drop before the Fed cuts — or rise even when the Fed holds steady.
Should you lock or float?
Nobody can tell you where rates will be next week, including us. What we can do is help you decide how much risk you're comfortable carrying. If you're close to closing and the payment works, locking takes the guesswork off the table. If you're further out, ask whether a float-down option is available and what it costs. Rates change daily, and the APR you'd actually be offered depends on your credit, loan amount, property type, occupancy, and the lender. Nothing here is a quote or an offer to lend.
- Lock: protects against rates going up
- Float: lets you capture rates going down — at the cost of risk
- Float-down: a one-time relock if rates drop materially
What to keep an eye on
If you're shopping for a loan, three scheduled events tend to move pricing: the monthly CPI release, the monthly jobs report, and Fed meetings (plus the minutes that follow). Rates can also move on news nobody saw coming, which is why a quote from last week isn't a quote for today.
