Master Hidden Secrets of Mortgage Rates Today

Factors Affecting Mortgage Rates

The Federal Reserve plays a critical role in determining mortgage rates. By setting the federal funds rate, the Fed influences borrowing costs across the economy. When the Fed raises rates, mortgage rates tend to rise, and when it cuts rates, mortgage rates often fall. Inflation also affects mortgage rates; higher inflation usually leads to higher rates as lenders demand more return to compensate for the decreased purchasing power of future interest payments¹.