Mortgage rate predictions: Mortgage rates have slipped slightly this week, according to Freddie Mac, but the main question for homebuyers is where borrowing costs are headed over the longer term. Since mortgage interest rates tend to move in step with the 10-year Treasury yield, here is a five-year mortgage rate forecast, as per a Yahoo Finance report.
Mortgage rates generally follow the direction of the 10-year Treasury note, though the two rarely match exactly. A spread, typically a couple of percentage points, separates them. To understand where mortgage rates may be headed, analysts first look at what’s coming for Treasury yields.
Global economist at Deloitte Touche Tohmatsu Ltd, Michael Wolf, outlined the firm’s updated expectations in a June report that laid out the firm’s Treasury yield expectations over the next five years.
He wrote, “We expect the 10-year Treasury yield to hover near 4.5% for the remainder of this year, despite a softening in economic data and a 50-basis-point cut from the Fed in the fourth quarter of 2025,” adding, “The 10-year Treasury yield begins to decline slowly in 2026, falling to 4.1% by 2027 and remaining there through the end of 2029,” as quoted by Yahoo Finance.
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Goldman Sachs analysts share a similar view, projecting the 10-year yield will stay near 4.1% through 2027.
The Congressional Budget Office is also in line with that outlook, forecasting the 10-year to end 2025 at 4.1%, dip to 4% in 2026, and settle near 3.9% through 2029.
In recent years, the gap between the 10-year Treasury and the average 30-year fixed mortgage rate has been wide, often around 2.5 percentage points. That’s a notable shift from the 2010-2020 period, when the spread frequently hovered closer to 1.5 to 2 points.
A simple example:
Yahoo Finance used the latest version of GPT-5 suggested using a narrower spread, between 2.1 and 2.3 percentage points, based on the historical shift:
Using these estimates, Yahoo Finance built a five-year mortgage rate forecast based on projected Treasury yields and the expected spread.
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As with any long-range outlook, there’s a wide margin of uncertainty. Forecasts could be upended if Treasury yields move sharply in either direction, particularly in the case of a major economic downturn, or if the spread between mortgage rates and Treasurys suddenly tightens or widens. A significant shift in Federal Reserve policy could also reshape the landscape.
What is needed to estimate future mortgage rates?
A projected Treasury yield plus the estimated spread.
Why do Treasurys matter for mortgages?
Lenders use Treasury yields as a guide when pricing 30-year fixed mortgage rates.
