Almost every day, I am asked, “What’s the rate today?”

It’s a fair question, but the truth is: there’s no single answer. Your mortgage rate isn’t a flat number printed on a board somewhere (when I post the mortgage rate, it’s the national average rate for top-tier scenarios). It depends on the market, your profile, and some moving parts behind the scenes. If someone quotes you a rate without asking any questions, they’re either guessing or just trying to reel you in.

Here’s how mortgage rates are actually built.

It starts with the mortgage market.

When a lender funds your mortgage, they usually don’t keep it. Instead, they sell it to investors by bundling it together with thousands of other loans. These bundles are called mortgage-backed securities, or MBS. MBS are like boxes of loans that investors buy to earn returns from the interest homeowners pay each month.

MBS are traded like bonds, and just like bonds, the price of the security and the yield (or return) move in opposite directions. When prices of MBS fall, yields rise — and that translates into higher mortgage rates for new borrowers. When prices rise, yields fall — and rates usually come down.

Why does this matter? Because mortgage lenders base their rate sheets on what investors are willing to pay for those loans in the secondary market. If MBS prices drop, investors expect a higher return. That means lenders need to raise mortgage rates to make those loans attractive enough to sell. If prices go up, lenders can lower rates while still meeting investor expectations.

So when you hear “rates went up today,” it’s often because MBS prices. MBS prices are influenced by a few key things: inflation, the Federal Reserve’s policies, and the overall economic outlook. Rising inflation, for example, usually drives MBS prices down, which pushes rates up.

The 10-year Treasury yield is one of the strongest indicators of where mortgage rates are headed. Mortgage rates tend to move in the same direction, with a margin (or spread) added on top, which is usually between 1.5% and 2%. That spread can widen or narrow depending on market conditions, investor appetite, and overall risk sentiment.

Then there’s servicing — what happens after your loan closes.

Once your mortgage is sold, another company usually takes over the monthly servicing: collecting payments, managing escrow, sending statements, and handling issues. This has value. The company servicing your loan collects a small slice of your monthly payment, often around 0.25% of your loan balance per year.

That income stream is worth something up front, so investors pay the original lender a fee for the servicing rights. This is called a Servicing Release Premium (SRP). The size of that premium depends on things like your loan size, credit profile, interest rate, and how long the loan is expected to stay active.

If your loan is seen as more profitable to service, meaning you’re likely to hold onto it for a while, the SRP may be higher. That added revenue can help the lender offer you a better rate. On the flip side, if the loan is expected to refinance quickly (think high rates that are expected to drop shortly) or carry more risk, the SRP may be smaller, which can lead to slightly worse pricing.

Many borrowers mistakenly believe they pay interest to their loan servicer and worry about ribbis when their loan is transferred. However, this concern is unnecessary since the servicer typically only manages the loan.

Next are the adjustments based on your specific loan.

These are called loan-level price adjustments, or LLPAs. These are standardized pricing hits set by Fannie Mae and Freddie Mac, and every lender factors them into the rate you’re offered. They’re based on your credit score, your down payment (known as loan-to-value), property type, whether it’s a primary residence or an investment, and whether you’re buying, refinancing, or doing a cash-out.

LLPAs don’t change daily like the MBS market, but they do change over time, and they affect what your rate looks like even if the base market rate stays the same.

Lender margin matters too.

Every lender adds a margin to cover overhead, risk, and profit. Some lenders choose to run high-margin, low-volume operations, while others aim for lower margins but close more loans. That strategy affects how competitive a lender’s pricing is on any given day.

So what’s your rate?

That depends on all of the above: what’s happening in the MBS market, how investors value your loan, your credit profile, loan purpose, down payment, and who you’re working with.

Two people could call the same lender on the same day and get different rates. That’s because no two loan scenarios are the same.