Basis point
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Definition
A basis point is one one-hundredth of a percentage point. Official market material uses it to describe small interest-rate changes. It is a unit of measure, not a loan product and not a rate quote.
In plain English
Mortgage rates are often discussed in very small steps. A basis point is the unit for those steps: one one-hundredth of a percentage point. A change of 100 basis points is a one-percentage-point change. The unit does not say whether a quoted rate is a good offer.
Technical definition
The Federal Reserve reform glossary is PRIMARY. It defines a basis point as one one-hundredth of a percentage point.
Why it matters
Lock and pricing conversations use bps and bp as shorthand. Readers need the unit kept distinct from a product name or a recommended rate.
Example
A one-percentage-point rate change equals 100 basis points.
Related terms
Sources reviewed
Regulatory Reform Glossary
Source reviewedSeptember 7, 2026
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