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Why Mortgage Rates Rise and Fall

Mortgage rates can make—or break—a home sale as even small fluctuations can make a big difference in a homebuyer’s monthly mortgage payment.

So, why do mortgage rates rise and fall?

One of the biggest drivers is the U.S. Federal Reserve. When the Fed hikes up interest rates to tamp down on inflation, mortgage rates tend to rise. But when the Fed lowers its rates, mortgage rates also often come down.

“One of the things that really affects the behavior of the [mortgage] rates is inflation,” said Miguel Mouriz, vice president of Central Florida for New American Funding. He is based in Orlando, Fla. “The higher the inflation, the higher the mortgage rates.”

Miguel Mouriz NMLS #283155