"If the Fed rate is at ZERO today, why are mortgage rates rising?"

This is a great question, and here is the answer...

The Fed can only directly control the fed funds rate, which is the rate that banks lend each other money overnight to meet reserve requirements. They don't directly set any other rates such as car loan rates, bank account or CD rates, or mortgage rates.

Mortgage rates are based on the price of a mortgage bond, called a mortgage backed security. These bonds are used to keep money flowing back to lenders so new mortgage loans can constantly be originated.

When the Fed kept rates at zero today, they kept the fed funds rate at zero. However, the bonds that mortgage rates are based on are increasing in yield just like similar bonds such as the 10yr Treasury. As mortgage bond yields rise, so do mortgage rates. Right now mortgage bond yields are rising over concerns about inflation and the heating up of the economy through 2021.

So, while the Fed can keep rates at zero, mortgage rates are likely to rise up a bit further in the future, but not enough that you should hold off on considering to refinance or buy a home.

If you would like to discuss more about where mortgage rates are headed, and what kind of rates you qualify for, I'm here anytime you need me.