A basis point is a financial unit equal to one one-hundredth of one percentage point.
Conversion
1 basis point = 0.01 percentage point. 25 basis points = 0.25 percentage point. 100 basis points = 1.00 percentage point.
Mortgage Example
A mortgage rate moving from 6.50% to 6.75% increased by 25 basis points.
Important Distinction
A 25-basis-point move in a Treasury yield does not guarantee a 25-basis-point change in consumer mortgage rates. Mortgage pricing reflects multiple market and loan-specific factors.
Homebuyer takeaway: When someone says rates rose 20 basis points, that means a movement of 0.20 percentage point.