If you’ve ever compared mortgage rates, you may have come across some strange numbers along the way.
Or perhaps some really specific numbers with multiple decimal places.
For example, 5.745% instead of say 5.75%, or 5.99% instead of 6%. It probably seems overly granular and hard to make sense of.
After all, you might need to review some old math textbooks to determine if 5.745% or significantly better than 5.75%.
In reality, it’s trivial stuff, but some lenders use these fine margins to win your business.
Mortgage Rates Are Typically Offered in 1/8 Increments
Traditionally, banks and mortgage lenders have offered mortgage rates in eighth increments to (perhaps) keep things simple.
Similar to how the stock market used to use fractional pricing with a minimum spread of 1/8 of a $1 before expanding to 1/16.
Today, this “minimum tick size” can be one penny or less, because when it comes down to it, every little bit matters.
Especially if someone is buying a lot of stock and/or trading frequently. Those seemingly negligible shifts can amount to big dollars.
In recent years, the mortgage industry has followed the stock market’s lead and instituted the same thing.
So instead of seeing mortgage rates like 6%, 6.25%, 6.5%, 6.75%, and 7%, you’ll see just about everything in between.
And as noted, you’ll even see rates that have three digits to the right of the decimal place.
This represents the thousandths column (remember elementary school), which seems a bit overdone, but I digress.
The way the world is these days, no opportunity to gain an edge, even if ever so slight, is passed up.
Some mortgage lenders realized this and began offering really fine-tuned rates to narrowly beat out their competition.
How Much Are You Actually Saving?
For example, if you look at a mortgage rate table (including those on this page), you may encounter some really specific mortgage rates.
Instead of 6.25%, you might see 6.21%, and instead of 6.50%, perhaps 6.49%. The latter example makes sense from a psychological perspective, especially if it ends with a “.99.”
Given we’re talking literal fractions of improvement in rate, you might be wondering how much you’d actually save.
Well, on a $500,000 loan, a rate of 6.25% would be $3,078.59 per month
Meanwhile, a rate of 6.21% would set you back $3,066.24 per month. So we’re talking about $13 per month.
How about a $350,000 loan at 5.75%, which would be $2,042.50 versus $2,041.39 for a rate of 5.745%.
We’re talking a $1 difference per month, which you probably wouldn’t even notice.
Tiny Mortgage Rate Improvements Push Lenders to the Top of the List
Here’s the thing though. A tiny little improvement in mortgage rate can push a lower-priced lender to the top of the pile.
So if you’re filtering mortgage lenders by interest rate, all of a sudden they’ll be the first one you see.
And that might be enough to win your loan despite offering very little incentive to choose them versus another lender.
The reason you’re seeing these weird rates is because despite being ever so slight, they are LOWER than the competition.
And if someone is shopping mortgage rates based mostly on price, they will stand out above the rest.
Importantly, this lender won’t give up much in return. They’re literally offering a rate a few basis points (bps) lower.
In addition, some lenders such as United Wholesale Mortgage, which works exclusively with mortgage brokers, offers tools like “Control Your Price” (CYP) that gives partners the ability to adjust loan costs.
In short, they can apply a few bps here or there to make a mortgage rate quote that little bit more attractive.
If a borrower says lender A is offering a rate of 6.125%, they could say, “How about 6.09%?”
It’s a tiny fraction of a difference, but it is still technically better, assuming the loan costs are the same.
Or they can lower your loan costs to get a comparable rate, so if a rate buydown was $1,000 at lender A, maybe it’s only $500 with them.
Speaking of, make sure you look at the costs associated with the loan, typically represented as the mortgage APR, to ensure you aren’t paying more for a slightly lower rate.
The interest rate is just one component of the deal and without knowing if there are lender fees and/or discount points required, you could end up worse off.
Read on: 2026 Mortgage Rate Forecast
(photo: MissyH)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.