# California Mortgage Rates: What Drives Them & How to Lock the Best Rate
Mortgage rates change daily — sometimes multiple times per day. Understanding what moves rates and when to lock can save you tens of thousands over the life of your loan.
What Drives Mortgage Rates
Mortgage rates are primarily driven by the 10-year Treasury yield, not the Federal Reserve's federal funds rate directly. When Treasury yields rise, mortgage rates typically follow. The spread between the 10-year Treasury and the average 30-year mortgage rate is usually 1.5-2.5 percentage points. Key factors include Federal Reserve monetary policy and economic outlook, inflation data (CPI, PCE) — higher inflation pushes rates up, employment reports — strong jobs data tends to push rates up, geopolitical events and market uncertainty (which can push rates down as investors flee to bonds), and housing market conditions and mortgage-backed securities demand.
How California Rates Compare
California rates are generally in line with national averages for conforming loans. However, jumbo loans (above $1,209,750 in most CA counties) sometimes carry slightly lower rates than conforming loans because they are kept in portfolio by large banks competing for high-net-worth borrowers. Non-QM rates (bank statement, DSCR, ITIN) are typically 1-3% above conventional rates, reflecting the additional risk. Hard money rates range from 8-14% due to the short-term, asset-based nature of the financing.
When to Lock Your Rate
A rate lock guarantees your interest rate for a specified period (typically 15, 30, 45, or 60 days) while your loan is processed. Lock when you are under contract on a property and have a clear closing timeline, rates are at a level you are comfortable with, and economic data or Fed announcements suggest rates may rise. Do not lock too early — if your lock expires before closing, extending it costs money (typically 0.125-0.25% of the loan amount per week).
Float-Down Options
Some lenders offer a "float-down" provision that lets you take advantage of lower rates if they drop after you lock. This typically costs 0.125-0.25% upfront but provides insurance against rate drops. Save Financial negotiates float-down options with our wholesale lenders on behalf of clients when market conditions warrant it.
How Mortgage Brokers Get Better Rates
Mortgage brokers like Save Financial access wholesale rate sheets from 20+ lenders — these rates are lower than the retail rates you see advertised by banks. Banks add a margin to cover their overhead and profit. Brokers operate on thinner margins and pass the savings through. This is why Save Financial offers a $500 price match guarantee — our wholesale access consistently produces lower rates than direct-to-consumer banks.
Rate Buydown Strategies
Paying "points" (prepaid interest) can lower your rate. One point = 1% of the loan amount. Typically, one point buys down the rate by 0.125-0.25%. This makes sense if you plan to keep the loan long enough to recoup the upfront cost. Break-even is usually 4-7 years. Temporary buydowns (2-1 or 3-2-1) reduce the rate for the first 2-3 years, with the seller often paying the cost — increasingly common in buyer's markets.
Contact Save Financial at (888) 703-1840 for today's wholesale rates across all 35 programs. We update rate sheets every morning.