How Mortgage Rates Are Priced, and Getting Today's Quote
What is today's mortgage rate in California? There is no single figure that is true for everyone. The bond market sets the day's level, a lender's price sheet turns that level into a rate for a particular borrower, property and lock period, and the level moves between one quote and the next. So this page prints no rate. It explains what moves rates, what changes yours, how a broker shops one file across several lenders' pricing, and how to get a quote for your own file from a loan officer, in writing.
What moves mortgage rates
Three things to know before reading any headline about rates.
The Federal Reserve does not set mortgage rates
The Federal Open Market Committee sets a target for the federal funds rate, the overnight rate at which depository institutions lend reserve balances to one another. That is a short-term rate. The St. Louis Fed's explainer calls the connection between monetary policy and mortgage rates less direct than its connection to short-term rates, and notes that a long-term mortgage rate can stay high, or rise, after the Fed lowers its short-term rate. A Fed decision can move mortgage rates on the day, in either direction, and they move every trading day in between.
Mortgage rates follow the long-term bond market
A fixed-rate mortgage is priced in the market for long-term bonds. The St. Louis Fed describes the Treasury note that matures in ten years as a benchmark for the long fixed-rate mortgage, and writes the relationship as that Treasury yield plus a spread. Mortgage-backed securities, the bonds that pools of mortgages are sold into, respond to the same economic signals as the note, and the spread between the two widens and narrows with expectations about inflation and other conditions. The Atlanta Fed's explanation for the pairing is that a mortgage is, on average, paid off or refinanced well before its full term, so investors price it against a note of similar life and ask for a premium for the risk that it is refinanced early.
The weekly survey is a national average, not a quote
Freddie Mac publishes a weekly national average of conventional, conforming, owner-occupied purchase mortgage rates, released on Thursdays and drawn from loan applications submitted through its automated underwriting system rather than from a poll of lenders. It is the public weekly reference. It is an average of loans already in process, for one borrower profile, so it is a reference point and not a rate any lender is offering you. This page links it and quotes no figure from it.
What changes your rate
The same day's market becomes a different rate for different files, because the agencies and the lenders price features of the loan into it. Fannie Mae publishes a Loan-Level Price Adjustment Matrix, incorporated into its Selling Guide, that assesses an adjustment for each of several loan features; the adjustments are cumulative, and FHA, VA and USDA loans are excluded from that matrix. As a matter of practice, lenders add overlays of their own. The factors are named here and never quantified: the matrix is Fannie Mae's to publish, the overlay is the lender's, and both change.
Credit score
The matrix prices by the loan's representative credit score, in tiers, and a lender's overlay can add to it. The score the lender uses is the one on the credit report it pulls for the file, which is one reason a quote is for a file and not for a person who has not yet applied.
Loan-to-value
The loan amount measured against the property's value. The matrix is laid out in loan-to-value bands, and a subordinate lien behind the first loan is a feature of its own. A larger down payment on a purchase, or more equity on a refinance, moves the file across the table.
Occupancy
The matrix carries occupancy as one of its features, so the same borrower buying a rental is priced differently from the same borrower buying a home to live in, and a second home differently again.
Property type and number of units
The matrix prices the type of property and the number of units as features of their own, so a property with more than one unit is read against a line of its own.
Loan purpose
The matrix has separate tables for a purchase, a refinance that takes no cash out and a cash-out refinance. Taking cash out is priced as a purpose of its own.
Points and lender credits
Discount points are paid at closing to lower the interest rate. A lender credit runs the other way: a higher rate in exchange for money toward closing costs. Every lender prices the trade differently, which is why the CFPB tells a borrower to ask for the options with and without points or credits, and to ask each lender for the same points or credits when comparing. Points and lender credits each have a place of their own on the Loan Estimate and the Closing Disclosure. A quoted rate without its points is half a quote.
The lock period
A rate lock holds the rate between the quote and closing, provided the loan closes within the lock period and the file does not change. Without a lock the rate can change at any time, because rates move daily. Lock periods come in standard lengths and sometimes longer; a longer lock can be priced differently from a shorter one, an extension can cost money, and a lock keeps you at the locked rate if the market falls while you are locked. The top of the Loan Estimate shows whether the rate is locked and until when, and it does not show the cost of an extension or the price of a different lock period, so ask. A locked rate can still change if the loan amount, the down payment, the loan type, the appraised value, the credit score or the documented income changes.
How a broker shops pricing
We are a mortgage broker. We do not lend, and we do not set rates: the lender sets the rate, and we take your file to the lenders we work with and read their pricing for it.
The wholesale rate sheet, as a matter of practice
No regulator or agency publishes a description of a wholesale rate sheet, so what follows is industry practice and labeled as such. Each wholesale lender issues its own price sheet, as a rule daily and sometimes more than once a day when the bond market moves. For each loan program and lock period the sheet lists a base price across a range of note rates. The loan-level adjustments for the file, the agency matrix and the lender's own overlays, are added, and the broker's compensation, set in advance with that lender, is built into the price the borrower sees. A rate can be locked only against a current sheet, which is why a quote given before the file is locked is not a commitment.
What the broker is paid cannot depend on the rate
Under Regulation Z's loan originator compensation rule, no loan originator may receive, and no one may pay, compensation based on a term of the transaction, and the interest rate is a term. The rule's own commentary applies it to a broker and the broker's employees. On any one loan the broker is paid either by the lender or by the borrower, never both; the rule forbids dual compensation. What that means for you: the rule removes the pay incentive for a loan officer to steer a file to a higher rate, and the compensation is disclosed on the Loan Estimate and the Closing Disclosure.
How the quote for your file is made
A loan officer takes the file as it is, the credit score, the loan amount against the value, the occupancy, the property, the purpose, the points you want to pay or the credit you want, and the lock period you need, and reads each lender's current sheet for that combination. The quote is the lender's price for that file on that day. Once you apply it is written up as a Loan Estimate, the form every lender must use, so one lender's quote can be set beside another's line by line. Change any input and the quote changes; let the day pass and the sheet changes.
Why this page shows no rate
Regulation Z's advertising rule does not forbid advertising a rate. It sets what an advertised rate has to be and what it has to carry. An advertisement may state only the terms the creditor actually is or will be prepared to offer; the rule's commentary gives the example of a very low annual percentage rate that will not in fact be available at any time. A rate has to be stated as an annual percentage rate, using that term, with a statement that it may increase if it can, and for credit secured by a home no other rate may appear except a simple annual rate stated beside the APR and no more conspicuously than it. And once an advertisement states certain terms, a down payment, the number or period of payments, the amount of a payment or the amount of a finance charge, it has to state the rest: the down payment, the terms of repayment over the full term, and the annual percentage rate. Regulation N, the federal rule on mortgage advertising, separately makes any material misrepresentation about a rate, a fee or a payment a violation, for a broker as much as for a lender.
Read honestly, that means a rate printed here would have to be an APR a lender we work with can actually deliver, carry the full set of disclosures, and be refreshed every time a wholesale sheet changes. Rates move daily and differ by file, so the page gives none and offers a written Loan Estimate for your file instead. California's rules for a licensee's loan advertising point the same way: an advertisement about the rates, terms or conditions of a loan may not be false, misleading or deceptive, and a loan advertisement has to carry the broker's Department of Real Estate license number and NMLS identifier, which this site prints in the footer of every page and on its licensing page.
The site's standing disclosure: The site publishes no interest rates, fees or payment figures. A rate for a specific file comes from a loan officer.
Call, email or start the application
Call or write to us and a loan officer here reads what you send. If you are ready, the application is open.
Tell us what you are planning and where the property is. A loan officer reads what you send and quotes from the lenders' current pricing for your file; once you apply, the quote is a written Loan Estimate you can set beside any other lender's.
What people ask about rates
What is the mortgage rate today in California?
There is no single figure that is true for every borrower in California, and this site publishes none. The day's level is set in the bond market and moves daily; a lender's price sheet turns it into a rate for a particular credit score, loan amount against value, occupancy, property, purpose, points and lock period. Freddie Mac's weekly survey is the public national reference, and it is an average of loans in process for one borrower profile, not an offer. The rate for your file comes from a loan officer, in writing as a Loan Estimate, and it stands only once it is locked.
Is the rate I see online the rate I would get?
Not unless it was quoted for your file. A rate in an advertisement has to be an annual percentage rate the creditor is actually prepared to offer, by federal rule, but it is priced for an assumed borrower, property, loan amount, points and lock period, and it is as of the moment it was posted. Your rate is priced from your credit report, your loan-to-value, how you will use the property, the loan's purpose, the points or credits you choose and the lock you need, on the day it is locked. The honest comparison is Loan Estimate against Loan Estimate, with the same points or credits requested from each lender.
What is the difference between the rate and the APR?
The interest rate is the yearly cost of borrowing the principal, stated as a percentage of it, and it does not include fees. The annual percentage rate, the APR, is a broader measure of the cost of the loan: the interest rate plus points, broker fees and the other charges the rule counts, expressed as a yearly rate, which is why it is usually higher than the interest rate. On a Loan Estimate the interest rate sits on the first page under the loan terms and the APR on the third page under the comparisons. Two cautions from the CFPB: an adjustable-rate loan's APR does not reflect the highest rate the loan can reach, and the APR on a home equity line of credit (HELOC) is figured differently and does not include fees, so do not compare it with a closed-end loan's.
Does a broker get a better rate?
We do not claim that, and the rules do not let a broker's pay ride on the answer. What a broker does is take one file to several lenders' pricing instead of one lender's, so the quote you see is chosen from more than one sheet. Under Regulation Z's loan originator compensation rule a broker's compensation may not be based on a term of the loan, the rate included, and on any one loan the broker is paid by the lender or by the borrower, never both. Whether the quote from a wholesale lender through a broker is lower than a bank's own quote on a given day is a question only the two Loan Estimates can answer, and the CFPB suggests asking whether a broker is involved in your loan and what the broker's fee is.
When should I lock?
When the quote is one you can close on within the lock period. A lock holds the rate from the day it is set until the lock expires, provided the loan closes in time and the file does not change; until then the rate can move either way every day. A lock that outlasts the file costs an extension, and a lock set before the market falls keeps you at the locked rate. Nobody here can tell you where rates go next, so the useful questions are practical ones: how long the file needs to close, what the lender charges for that lock period and for an extension, and whether anything in the file, the loan amount, the appraised value, the credit score, is still open and could change the price. The Loan Estimate shows whether the rate is locked and until when.
Sources
The primary sources this page rests on, as read on the day under the byline. None is quoted for a figure.
- Federal Reserve Bank of St. Louis, Page One Economics: What Determines Mortgage Rates?
- Federal Reserve Bank of Atlanta: Not Joined at the Hip, the Relationship between the Fed Funds Rate and Mortgage Rates
- Board of Governors of the Federal Reserve System: Open Market Operations
- Freddie Mac: Primary Mortgage Market Survey
- Fannie Mae: Loan-Level Price Adjustment Matrix
- CFPB: How should I use lender credits and points?
- CFPB: What's a lock-in or a rate lock on a mortgage?
- CFPB: What is the difference between a mortgage interest rate and an APR?
- CFPB: What is the difference between a mortgage lender and a mortgage broker?
- CFPB: Explore interest rates, a public comparison tool
- CFPB eRegulations: Regulation Z, the loan originator compensation rule, with its official interpretation
- CFPB eRegulations: Regulation Z, the advertising rule, with its official interpretation
- Regulation N, Mortgage Acts and Practices, Advertising: prohibited representations
- California Department of Real Estate: License Disclosure Requirements for Mortgage Advertising
- California Business and Professions Code: a broker's license number and an originator's NMLS identifier on advertisements soliciting borrowers
- California Business and Professions Code: no false, misleading or deceptive advertising of loan rates, terms or conditions
On this site:Get a quoteHow we shop your loanAdjustable-rate mortgagesMortgage payment calculatorAll of the calculatorsLicensing and disclosures
Published by
This page is general information about how mortgage rates are priced, not an offer of credit, a commitment to lend or a quote. We are a mortgage broker and do not lend: the lender sets the rate, and a rate for your file comes from a loan officer, in writing.
Ask for the quote for your file
Start the application or call. A loan officer reads what you send and quotes from the lenders' current pricing for the file.
No credit pull to get started. This is not a commitment to lend. Equal Housing Opportunity.