What moves mortgage rates from day to day, explained without forecasts
The bond link
Forecast-free answer
Most new mortgages are pooled into mortgage-backed securities sold to investors. When investors pay more for those securities, lenders can offer lower rates; when they pay less, rates rise. MBS prices usually move in the same direction as longer-term Treasury yields, so the ten-year Treasury yield is a common, if imperfect, guide.
Last reviewed against the primary sources listed below.
Why not a perfect match
The gap between mortgage rates and Treasury yields changes with prepayment risk, market volatility and investor demand. Treasury publishes its daily yield data.
Market questions
Why does the 10-year Treasury matter for mortgages?
Many mortgages are repaid or refinanced within about ten years, so their securities compete with similar-length Treasuries for investors.