Mortgage rates are climbing, and borrowers want to know if they’re getting a good rate. The answer depends on many factors, including credit score and down payment amount.

Mortgage interest rates change all the time. It’s important to compare them so that you can understand what lenders are offering and how they might vary by borrower.

Rates vary by lender

Lenders set their rates based on a variety of factors that can change from one day to the next. These factors include the state of the economy and how much risk the lender perceives in lending to you. For example, a great economic report can send mortgage rates skyrocketing while a poor report may send them plummeting.

Mortgage rates are also influenced by inflation. Typically, when there’s low inflation, mortgage lenders offer lower rates.

Getting a good mortgage rate is a lot of work, but it’s worth the effort in the long run. The key is to shop around and compare Loan Estimates from multiple lenders. This will give you a clear idea of what is and isn’t a good mortgage rate for your specific circumstances.

And remember, mortgage rates vary by credit score, loan type and other details, so it’s important to understand your options. Use our calculator to get a personalized view of your mortgage interest rates and costs.

They’re based on your credit score

Mortgage rates are influenced by a variety of economic factors, including the Federal Reserve benchmark interest rate and unemployment. But it’s your credit score and financial history that have the biggest impact on what rates you can get. That’s why it’s so important to have a strong credit profile and to make sure your credit reports are correct.

A borrower with a higher credit score can typically qualify for better mortgage rates because lenders see them as less risky. This is why it’s so important to check your scores regularly and to work on improving them. Even small changes can make a big difference in your mortgage costs.

It’s also a good idea to shop around for mortgage rates. You can do this by requesting loan estimates from multiple lenders and comparing them side-by-side. Then you can find the best deal for your unique circumstances. A good credit score can help you save thousands on your mortgage over the life of the loan.

They’re determined by the economy

Mortgage rates can feel like they’re a mystery that is only understood by those deep in the mortgage industry. But in reality, they’re a reflection of basic market economics and the health of the housing market.

For example, when inflation is high and the economy is growing, investors demand a higher yield from mortgage bonds. This raises mortgage rates for borrowers. When the economy is slowing, on the other hand, mortgage rates tend to fall.

These trends are out of the lender’s control, but there are some things that a borrower can do to reduce their rate. For example, they can improve their credit score to show lenders that they’re a low-risk borrower. And they can opt for a shorter-term loan to help reduce the interest they’ll pay. Ultimately, the best way to find a good mortgage rate is to shop around and compare different offers. Odds are, there’s a better offer out there for you.

They’re influenced by the Federal Reserve

As a potential home buyer, you’ll likely want to lock in a good mortgage rate. However, the rates that lenders offer can be very volatile. Some of the factors that go into determining mortgage rates are personal, such as your credit score and income-to-debt ratio, while others are out of your control, including base interest rates set by the Federal Reserve.

The Fed’s decisions on short-term interest rates often impact mortgage rates indirectly by raising or lowering the price of mortgage-backed bonds. When the yield on 10-year Treasury bonds goes up, mortgage rates typically follow. However, the Federal Reserve hasn’t directly raised or lowered mortgage rates in the same way it does with variable-rate credit cards. That’s because longer-term loans like mortgages have a lower risk of default than other types of debt. This is why mortgage rates are lower for top-tier borrowers with clean credit scores and stable finances. They are much higher for those with less-clean credit and a history of late payments.

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