Plain language
Glossary
Every term used on this site, explained without assuming you already know it. If something here is still unclear, that is our failure rather than yours — tell us and we will rewrite it.
Basis point
One hundredth of a percentage point.
25 basis points is 0.25%. Used because "the rate rose 0.25 percent" is ambiguous — it could mean a quarter of a point, or a quarter of one per cent of the rate. Basis points remove the doubt.
Percentage point (pp)
The arithmetic difference between two percentages.
Going from 6% to 7% is a rise of one percentage point — but a rise of about 17 per cent. Spreads on this site are always in percentage points.
Spread
One rate minus another.
The gap between what a lender charges and what it costs them to fund the loan. When the mortgage-Treasury spread widens, borrowers pay more even if the underlying bond market has not moved.
Yield curve
What a government pays to borrow, at each length of time.
Normally longer borrowing costs more, because more can go wrong over thirty years than over two. The shape of that line is watched closely because it summarises what markets expect.
2s10s
The 10-year yield minus the 2-year yield.
The most-quoted single measure of the curve. When it goes below zero the curve is "inverted" — lending for ten years pays less than for two, which is unusual and has preceded every US recession since the 1970s.
Inverted curve
When short-term borrowing costs more than long-term.
It is a signal, not a mechanism — an inversion does not cause a downturn, it reflects investors expecting rates to fall, which usually happens when the economy weakens.
LTV (loan-to-value)
How much of the property price is borrowed.
A 20% deposit on a £400,000 home is an 80% LTV. Lower LTV means the lender has more cushion if prices fall, so the rate is usually lower. Above 80% typically triggers mortgage insurance.
FICO score
The credit score most US mortgage lenders use.
Roughly 300 to 850. Our credit-tier pages show what borrowers in each band actually locked, which is a measured fact rather than a lender’s estimate of what you might be offered.
First lien
The mortgage that gets repaid first if the property is sold.
A second lien — a home equity loan, say — sits behind it and carries more risk, so it prices higher. Our state pages count first liens only, so the comparison stays like-for-like.
Conventional loan
A mortgage not backed by a government programme.
As distinct from FHA, VA or USDA loans, which carry government guarantees and price differently. Mixing them into one average would make state comparisons meaningless.
Origination
A loan actually made.
As opposed to an application, an approval, or an advertised rate. Our state pages measure originations — money that genuinely changed hands.
Percentile
Where a value sits in a ranked list.
If the 25th percentile rate is 6.4%, then a quarter of borrowers paid less than that and three quarters paid more. The distance between the 25th and 75th is a good measure of how much shopping around is worth.
Posted rate
The advertised list price of a mortgage.
In Canada, posted rates are largely fiction — almost nobody pays them, and discounting is universal. They still matter because they feed into penalty calculations and qualification tests.
Effective rate
The average actually paid on new lending.
What the Bank of England and the ECB publish, and what the Bank of Canada calls "funds advanced". Directly comparable across those three; not comparable to a posted rate.
APY / APR
Annualised yield (savings) and annualised cost (borrowing).
Both fold compounding into a single yearly figure so products with different payment schedules can be compared. APR on borrowing also includes certain fees.
Vintage
The date a figure was published, as opposed to the date it describes.
Statistics get revised. A rate reported for March may be corrected in May. We store both dates, so "what was believed at the time" stays answerable.
Policy rate
The rate a central bank sets directly.
It anchors everything else, but does not determine it — mortgage rates are set by lenders pricing off bond markets, which is why they can move when the policy rate does not.