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.
What the latest CPI print did
The Consumer Price Index (CPI) is the inflation report markets watch most closely. A hotter-than-expected print pushes yields up because investors expect the Fed to stay restrictive. A cooler print does the opposite — it signals rate cuts are closer, and yields fall.
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?
If you're within 30 days of closing and rates have dropped meaningfully from where you started, locking removes risk. If you're 45+ days out and expect cooler inflation data, a float-down option might be worth asking about. Your broker can quote both sides.
- 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 watch next
Keep an eye on the next CPI release, the monthly jobs report (NFP), and Fed meeting minutes. These three events move mortgage rates more than almost anything else in a typical month.