Freddie Mac said mortgage rates fell half a percentage point last year. But where are interest rates heading in the long term? Mortgage rates are determined by a variety of factors, with the 10-year Treasury note yield being the primary one.
Mortgage rate forecasts are best based on trends in the 10-year Treasury bond rate. While these two rates generally move in the same direction, there is a spread between them, which we will explain below.
First, let’s look at where U.S. Treasury yields are likely to go over the next five years. We will combine human analysis with data extracted by artificial intelligence to make predictions.
Michael Wolf is a global economist at Deloitte Touche Tohmatsu Ltd. In September, Deloitte’s Center for Global Economics released its latest U.S. economic forecast, in which Wolf laid out the firm’s forecast for Treasury yields over the next five years.
“While we expect short-term rates to decline over the next few years, long-term rates are expected to remain elevated,” he wrote. “Notably, we expect the 10-year Treasury yield to remain above 4.1% through 2030.”
Let’s graph this prediction.
This isn’t a big deal. Goldman Sachs analysts expect that in the long term, the 10-year Treasury bond rate will rise to 4.5% by 2035.
Meanwhile, the Congressional Budget Office (CBO) predicts that Treasury yields will be 3.9% by the end of 2026, before falling to 3.8% by 2030.
Since Deloitte’s forecast falls between those of Goldman Sachs and the Congressional Budget Office, we’ll use it as a benchmark.
As we mentioned above, there is a spread between the 10-year Treasury rate and the 30-year fixed mortgage rate. In recent years, the gap between the two has been around 2.5 percentage points. That’s a significant change from spreads from 2010 to 2020, when they were less than two percentage points and typically closer to 1.5 percentage points.
Using a spread of 2.5 percentage points, here’s an example of how Treasury rates compare to mortgage rates:
10-year Treasury bond interest rate = 4%
Spread = 2.5 percentage points
Mortgage rate = 6.5%
A recent example: As of December 10, the 10-year Treasury yield was 4.13% and the 30-year fixed mortgage rate was 6.19%. The spread is 6.19 – 4.13 = 2.06 percentage points.
The latest version of the artificial intelligence GPT-5 recommends a spread of 2.1 to 2.3 percentage points. Here’s the basics of it:
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Historical Standards (2010s):~1.7 percentage points
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In recent years (2022 to 2025):~2.6 pages
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Estimated 5-year average spread: About 2.1 to 2.3 percentage points
Using these spread estimates, we can now complete a five-year mortgage rate forecast.
Using the Treasury forecast above, we add the spread between the bond market and 30-year fixed mortgage rates to compile a five-year forecast:
Of course, these are long-term estimates based on historical norms and broad expectations. All those numbers could go out the window if any of the following happens:
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The 10-year Treasury note has performed better or worse than forecasts. For example, yields can collapse during a severe economic setback, such as a recession.
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The spread between U.S. Treasury and mortgage rates narrowed — or widened dramatically.
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There have been significant changes in monetary policy, driven by the Federal Reserve.
Discover the mortgage lenders with the best rates this week.
There is no forecast that mortgage rates will reach 3% over the next five years. However, who would have foreseen such low home loan rates in 2007, when rates were comparable to where they are now? Things like the Great Recession and a global pandemic get little attention, and dramatic events like these are exactly what cause mortgage rates to drop.
The above analysis predicts that mortgage interest rates will be around 6.28% to 6.48% in 2027.
Based on the above estimates, mortgage rates are not expected to fall significantly over the next five years. However, a recession or other unknown economic disruption, such as a financial collapse or a pandemic, could change the outlook.
If you’re considering an adjustable-rate mortgage with an initial fixed-rate term, you’ll first want to consider how long you’ll actually stay in the home you’re financing. Then begin the long-term mortgage rate forecast. The best approach may be to choose an initial term that best fits your current budget.
Laura Grace Tarpley Edited this article.