Here are six main factors that drive home loan rates.


  1. Economic data

Rates go up if non-farm payrolls are higher than expected, unemployment rate goes down or better than average economic data in general.

Rates will go down if unemployment goes higher, manufacturing slows or housing is weaker than expected.

Employment reports are released the first Friday of each month for the month prior by the BLS (Bureau of Labor Statistics) and is considered the most important economic indicator we have. 

  1. Inflation

Rates go up if Consumer Price Index goes higher, wholesale prices go higher or hourly earnings go higher.

     Rates go down if CPI goes down, lower wholesale prices or lower wages.

     Good news for the economy is usually bad news for interest rates.

  1. Stock Market

     Rates will go up if the market moves higher and rates will go down if the market declines.

The stock market has an inverse relationship with interest rates.  Money going into the stock market is money moving out of bonds causing the price of bonds to drop and pushing interest rates higher.

  1. The Federal Reserve

Rates will move up if the Feds pull money out of the monetary system usually indicating inflation.

Rates will move lower if the Feds move money into the system thereby causing a looser credit environment in an attempt to stimulate the economy.

By controlling the flow of cash in our economy the Feds attempt to keep inflation under control.

  1. Geo-Politics

Rates will tend to up if China’s GDP (Gross Domestic Production) improves or Middle Eastern tension eases.

Rates tend to move down with the European economy in decline and/or conflicts or acts of terror.

Investors often turn to the US markets as a safe haven for investing when things go wrong in the world.  Global stability pushes rates higher.

  1. Global Events

Rates go up with no events or worldwide catastrophes.

Rates go down with when there are Hurricanes, Typhoons, Tsunamis, and Earthquakes.

Again what’s good for the world is also bad for Bonds.  But when investors are attracted to US markets the flood of investments creates a strong environment for interest rates.


If you know of someone who is looking to buy or sell real estate call or text me at 530-306-3494 or email me at  I would appreciate the opportunity.