How mortgage rates are actually set for homebuyers. 🏡

Mortgage Rate Drivers - Mortgage rates are closely tied to the bond market, particularly the 10-year Treasury yields [1] - Economic conditions and inflation expectations significantly influence bond yields, subsequently affecting mortgage rates; a weak economy can lower rates, while strong economic data can increase them [2] Spread Analysis - The spread, the difference between the 10-year Treasury yield (approximately 420 basis points or 42%) and mortgage rates (approximately 650 basis points or 65%), is influenced by lender profit margins, loan origination costs, and demand for mortgage-backed securities [3] Borrower-Specific Factors - Personal finances, including credit score and down payment size, impact mortgage rates; higher credit scores and larger down payments generally result in lower rates due to reduced lender risk [4] - Advertised mortgage rates are typically available only to borrowers with high credit scores (700s or above) and substantial down payments (at least 20%) [5]