The Cost of Money

What a Rate Means for a Payment

Principal and interest only, on a 30-year fixed loan. Property taxes, insurance and any HOA dues or mortgage insurance come on top. Survey averages are not a quote: your own rate depends on your credit, down payment, points and loan program.

What Moves Mortgage Rates

The 10-year Treasury. Lenders price a 30-year loan off long-term bond yields, and because most mortgages are paid off or refinanced within about ten years, the 10-year Treasury is the benchmark. Turn on its overlay and the two lines move together, with the mortgage rate usually 1.5 to 2 points higher, and further apart when markets are nervous, as they were in 2023.

Inflation. A lender has to earn more than inflation over the life of a loan, so when prices climb quickly, rates follow. Inflation passed 14% in 1980, and mortgage rates topped 18% the next year.

The Federal Reserve. The Fed sets the rate banks charge each other overnight, not the rate on your mortgage. Its decisions sway the bond market, but a Fed cut does not guarantee cheaper mortgages, and the overlay shows the two parting ways more than once.

Moments in Mortgage History

A rate is easier to remember next to something else that happened that month. Each number below matches a marker on the chart, with the average rate for that month.