Are Mortgage Rates Influenced by the Stock Market?

Personal Finance

The stock market is constantly on the move, and mortgage interest rates can also fluctuate throughout the day. Is there a direct link between the two? Does a rising stock market mean an increase in mortgage rates? Conversely, does a lower stock market guarantee a drop in mortgage rates? In this article, we will clarify the relationship between the stock market and mortgage rates, discuss factors that can influence mortgage rates, and then review some specific things that can affect the interest rate you are offered by a lender.

Is there a link between mortgage rates and the stock market?

There is no direct link between the stock market and mortgage rates. Yes, at times, the stock market and mortgage rates may move in the same direction. At other times, they may move in different directions. Because they aren’t directly linked, you can’t count on a change in the stock market to be reflected in mortgage rates.

What factors can affect mortgage rates?

What are the real influencers on mortgage rates? There are numerous things that can affect the interest rates offered by lenders. Let’s turn our attention to three factors that are frequently tied to a change in mortgage rates.

The Federal Reserve

As the central bank of the United States, the Federal Reserve is responsible for monetary policy – the management of our money supply and credit. Although it does not directly set mortgage rates, some of the actions the Federal Reserve takes through its monetary policy can influence mortgage rates. It sets the federal funds rate, a short-term interest rate that can indirectly affect mortgage rates. In addition, the purchase or sale of Treasury bonds by the Federal Reserve affects the supply of money, which then can affect other interest rates, including mortgage rates.

Economic Growth and the Housing Market

Economic growth or a lack of growth can influence mortgage rates, too. Generally, a strong economy can spill over into the housing market: As more people want to purchase homes, the resulting demand for mortgages can move interest rates higher. The opposite can happen when the economy is not growing: If fewer people want to buy homes and supply outpaces demand, interest rates may decline.


Inflation can be defined as the sustained upward movement in the prices of goods and services in the economy. This increase in prices results in a decrease in purchasing power. Mortgage lenders adjust their interest rates based on inflation, and mortgage rates are generally increased to offset inflation. During times when there is little or no inflation, mortgage rates might remain steady. Of course, that also depends on the other factors that can influence mortgage rates.

What things can affect the interest rate you are offered?

While mortgage rates are influenced by a number of conditions you can’t control, the rate you are offered can be affected by factors specifically related to you. These factors can include your income, debt, credit history, property location, down payment, loan amount, and loan type. For example, borrowers with high credit scores typically receive better interest rates than borrowers with low credit scores. And a borrower that offers a larger down payment might receive a lower interest rate. Also, the term of the loan can influence the mortgage rate. A 15-year mortgage typically has a lower interest rate than a 30-year mortgage. The loan type and options you select can also make a difference in the interest rate you are offered. For instance, an adjustable-rate mortgage may offer a lower interest rate than a fixed-rate mortgage.


Mortgage rates are not directly linked to the stock market, and there isn’t a lone factor that controls mortgage rates. Instead, there are many things at play when mortgage rates rise or fall. Actions taken by the Federal Reserve, the state of the economy, and inflation are just some of the things that can influence mortgage rates. Even personal factors such as your credit history or the type of loan you select can have an effect on the final rate you are offered.

If you would like to keep an eye on mortgage rates, sign up for our free mortgage rate watch. Interested in purchasing a home or refinancing? Explore our mortgage products to learn about your options.

Are Mortgage Rates Influenced by the Stock Market?

This blog post was published by Axos Bank on April 8, 2021 and last updated on April 8, 2021.

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