Key takeaways
- Mortgage rates change daily — sometimes more frequently — based on the economy, inflation and other factors.
- If you’re looking to get preapproved for a mortgage soon, check rates more often and take note of historical trends. This can help you pinpoint when to lock your rate.
- You can find the latest daily mortgage rates and longer-term rate trends on Bankrate.
Unlike some other financial products, the rates on mortgages regularly fluctuate up and down. Keeping tabs on this movement can help you determine the right time to buy a home or refinance. Here’s what to know as you track the changes.
How often do mortgage rates change?
Mortgage interest rates are in constant flux and can change daily or even multiple times a day. These changes might be minor or more volatile depending on what’s happening in the broader economy.
From a historical perspective, these shifts are nothing new. In the 1980s, for example, mortgage rates were in the teens. In 2020 and 2021, they were at record lows.
What factors determine mortgage rates?
Mortgage rates can change for many reasons, including:
- Economic conditions
- Inflation
- U.S. Treasury bonds, particularly 10-year Treasury notes
- Federal Reserve policy
- Global events like a natural disaster or war
Your own mortgage rate is also influenced by:
- Your mortgage lender
- Your credit score
- Your debt-to-income (DTI) ratio
- Loan size
- Property type
While all of these factors matter, for 30-year fixed mortgage rates, the closest parallel is often the 10-year Treasury yield. This is the effective yield rate on U.S. Treasury notes, one of the safest investments because of their backing by the U.S. government. When investors feel uncertain about the economy, they look to lower their risk. As such, demand for Treasury notes tends to rise, pushing those prices up and the yields down. Mortgage rates typically follow this yield, with a margin or “spread.”
Questions to ask when comparing mortgage rates
Your mortgage rate helps determine how much you pay each month for the loan, as well as your total interest charges over the length of the mortgage. As you compare mortgage rates, here are some questions to consider:
What loan do you qualify for?
Different loan types carry different interest rates, so make sure you’re comparing apples to apples based on the type of mortgage you can be approved for. For example, adjustable-rate loans typically start with a lower rate than fixed-rate loans — though that’ll change after the initial period — and 15-year loans tend to come with lower rates than 30-year loans.
How much are you putting down?
The higher your down payment, the better your chances of scoring a lower interest rate. Instead of estimating during the preapproval process, make sure you know exactly how much you’re putting down so you can get an accurate quote from the lenders you’re considering.
What’s a “good” mortgage rate?
Because mortgage rates change daily, it can be hard to know if the rates you find are the lowest you could possibly get. Each day, Bankrate provides benchmark rates, including for the 30-year and 15-year fixed-rate mortgage, based on a survey of the largest mortgage lenders in the U.S. Depending on the type of loan you’re getting, you can use this information to judge whether an offer is a “good” one, or if there might be better choices out there.
Remember, though, that any actual rate offers you receive are based on your credit score, income and more. The more you shop around, the easier it will be to understand what a good rate is for your credit and financial profile.
What is the APR?
The terms interest rate and APR are often used interchangeably, but they’re not the same thing. Both are expressed as percentages, but the interest rate on a mortgage represents the interest charged on the loan principal, or the amount you’re borrowing. In contrast, the APR, or annual percentage rate, indicates the yearly cost of the loan including the interest, some closing costs and other fees. The APR is a more accurate picture of your all-in cost, and is always higher than the interest rate.
By law, lenders are required to disclose the APR on a loan offer, but they might only include some of the costs in the APR that’s advertised. You can ask what fees the lender factored into the APR and use that information when comparing your options.
What are the closing costs and fees?
Some lenders have flexibility when it comes to closing costs, like the origination fee. Your lender might be able to waive a certain cost altogether, like the appraisal or application fees. It can be helpful to know this information when making your comparisons.
Are you paying for mortgage points?
In some cases, the APR a lender quotes you includes mortgage points, fees you pay at closing in exchange for a lower interest rate. Each point usually costs 1 percent of the total loan amount and lowers your interest rate by 0.25 percent. Depending on how the math works out, it might not be worth paying points, so compare these scenarios carefully.
What’s your timeline?
Once you find a rate you like, you can lock it in so it won’t change as you shop for homes. Locked-in rates are typically valid for 30 to 60 days, but sometimes up to 120 days. However, if you’re not planning to close on a mortgage within that time frame, it might be best to continue to keep an eye on rates without taking the step to lock one in.
Have you already locked a rate?
If you’ve already locked in a rate, you can still continue to compare mortgage offers, but lenders typically won’t allow you to break the lock without paying a fee. If your lock doesn’t have a float-down provision, you won’t be able to take advantage of lower rates at all unless you restart the mortgage process with a new lender. Depending on the difference in rate, though, it can be worth it.
Note that if you’re working with a mortgage broker, the broker can do some of this work for you. Brokers work with multiple lenders to help you find a good rate. However, it’s also a good idea to do your own research so you can compare rate offers with what your broker provides.
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