Today's interest rates are calculated based on a complex interplay of various factors, primarily influenced by central banks and financial markets. Central banks, such as the Federal Reserve, set the benchmark interest rate, which serves as a foundation for other rates. Market forces, including inflation expectations, economic conditions, and geopolitical events, impact the supply and demand for credit, influencing lending rates. Banks and financial institutions also consider their operational costs, credit risk, and profit margins when determining the interest rates they offer to borrowers. Additionally, data analytics and algorithmic models play a significant role in determining personalized rates for individuals based on their creditworthiness, financial history, and the type of loan or credit they seek. Overall, today's interest rates are the result of a dynamic and multifaceted process, reflecting both macroeconomic trends and individual financial circumstances.

The interest rate is the cost of borrowing money, expressed as a percentage of the principal amount, and it represents the lender's return on the loan. In contrast, the APR (Annual Percentage Rate) is a broader measure that includes not only the interest rate but also any additional fees or costs associated with the loan, such as origination fees, points, and other finance charges. The APR provides a more comprehensive picture of the total cost of borrowing and is useful for comparing different loan offers because it takes into account both the interest rate and the associated fees, helping borrowers make more informed financial decisions.

A mortgage rate lock is a financial arrangement between a borrower and a lender that guarantees a specific interest rate for a predetermined period, typically ranging from 15 to 60 days, though longer locks are sometimes available. This commitment ensures that the borrower will secure the agreed-upon interest rate, protecting them from potential rate fluctuations while the mortgage application and approval process progresses. Rate locks are essential for borrowers looking to secure a favorable interest rate and monthly payment, especially in a volatile market environment. However, they often come with conditions and may involve fees, so borrowers should carefully consider their options and timing when deciding to lock in a mortgage rate.

Interest rates can change frequently, and the frequency of these changes depends on various factors. Central banks, like the Federal Reserve, can adjust their benchmark interest rates periodically in response to economic conditions, typically during scheduled meetings. Short-term interest rates can change more frequently and are influenced by factors like economic data releases, geopolitical events, and market sentiment, causing daily or even intra-day fluctuations. Mortgage rates, which are influenced by these broader interest rate movements, may change less frequently but can still fluctuate weekly or even daily in response to market conditions. Fixed-rate mortgages offer more rate stability over the life of the loan, while adjustable-rate mortgages can see rate adjustments according to their specific terms. Overall, the frequency of interest rate changes varies depending on the type of rate and the prevailing economic environment.

Your rate will be calculated based on personal details including, but not limited to, your credit score and income. If you’re buying a home, the home price, your down payment and loan type are also considered.

If you have a purchase agreement for a home you want to buy, or you’re ready to refinance, talk to a Home Loan Expert or apply online. If approved, you’ll get a personalized rate.