Mortgage rates are set by lenders, but they follow the bond market more closely than the Federal Reserve.
The 10-year Treasury
Most 30-year mortgages are repaid or refinanced well before 30 years, so lenders price them off the 10-year Treasury yield. When that yield rises, mortgage rates usually follow within days.
The spread
Mortgage rates sit above the 10-year yield. The gap covers the risk that borrowers refinance early, the cost of servicing loans and the return investors demand to hold mortgage-backed securities. It tends to widen when markets are volatile.
Where the Fed fits
The Fed sets a short-term rate. It moves mortgage rates indirectly, through expectations about where short-term rates and inflation are heading. That is why mortgage rates can rise before the Fed acts, as they did in September 2026.
Your rate
Your own rate also depends on your credit score, down payment, loan type and any points you pay. Freddie Mac’s weekly average assumes 20% down and excellent credit.
Sources
This is information, not a recommendation to buy, sell or borrow. Read our investment disclaimer.
