📉📈 Mortgage Rates Change Because They're Tied to the Bond Market

Mortgage rates are mostly based on the price of mortgage-backed securities (MBS) — which are bonds that investors buy and sell every day.

• When investors buy more MBS, prices go up, and mortgage rates go down.

• When investors sell MBS, prices go down, and mortgage rates go up.

So What Makes Investors Buy or Sell?

A few key things affect their decisions:

1. Inflation Reports→ Higher inflation usually makes mortgage rates go up→ Lower inflation helps rates go down

2. Economic News→ Strong job reports or good retail sales? Investors fear more inflation → rates rise→ Weak economy? Investors shift to safer investments → rates fall

3. The Federal Reserve→ The Fed doesn’t set mortgage rates, but it influences them.→ When the Fed hints it may raise or cut rates (or tighten credit), markets react fast.

4. Global Events→ War, elections, bank failures, or stock market crashes can cause volatility — and move rates up or down quickly.

🕓 Why Rates Change Daily (Sometimes Even Hourly)

Investors react to news in real time — the MBS market trades just like the stock market, all day long. Lenders update their rate sheets based on those changes, often once or twice a day, and sometimes more if the market swings hard.

✅ Bottom Line:

Mortgage rates change daily (and sometimes multiple times a day) because they’re driven by supply and demand in the bond market, which constantly reacts to news, inflation, and investor expectations.

Let me know if you want a quick analogy or visual explanation too!