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Mortgage rate predictions for the next 5 years

The length of time will mortgage rates remain in the mid- to upper-6% range? Mortgage interest rates are figured out by lots of aspects, a major one being the 10-year Treasury yield. At Yahoo Finance, we've developed a five-year mortgage rate projection, built on a 10-year yield correlation, that supplies some insight.

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Mortgage rates are tuned to the government bond market

Mortgage rate projections might best be originated from 10-year Treasury note trends. While the 2 rates typically track in the exact same direction, there is a spread in between them that we will account for below.

First, let's understand where Treasury yields are headed in the next five years. We'll combine human analysis with information pulled from expert system to put together a prediction.

Economists' 5-year forecast for Treasury rates

Michael Wolf is a global economist at Deloitte Touche Tohmatsu Ltd. In June, the Deloitte Global Economics Proving ground provided an updated U.S. financial projection in which Wolf set out the company's Treasury yield expectations over the next 5 years.

"We anticipate the 10-year Treasury yield to hover near 4.5% for the rest of this year, in spite of a softening in financial information and a 50-basis-point cut from the Fed in the 4th quarter of 2025," he composed. "The 10-year Treasury yield begins to decrease slowly in 2026, falling to 4.1% by 2027 and staying there through the end of 2029."

Let's chart that forecast.

That's not much movement. Goldman Sachs experts concur, stating the 10-year Treasury will remain near 4.1% through 2027.

Meanwhile, the Congressional Budget Office (CBO) forecasts the Treasury yield to be 4.1% by the end of 2025, down to 4% in 2026 and remaining near 3.9% through 2029.

Dig deeper: When will mortgage rates decrease?

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Historical mortgage rates: How do they compare to present rates?

Estimating a 5-year spread

As we pointed out up top, the 10-year Treasury and 30-year fixed mortgage rates are separated by a spread. That distinction in between the two has been on either side of 2.5 percentage points in the last few years. That's a considerable modification when compared to the spread from 2010 to 2020 when it was under two portion points - and often near 1.5.

Using a 2.5 percentage point spread, here's an example of how Treasurys and mortgage rates compare:

10-year Treasury rate = 4%

Spread = 2.5 portion points

Mortgage rates = 6.5%

Here's a recent example: On Aug. 14, 2025, the 10-year Treasury yield was 4.23%, and the 30-year set mortgage rate was 6.63%. The spread was 6.58 - 4.29 = 2.29 portion points.

The newest variation of synthetic intelligence, GPT-5, suggested using a spread of 2.1 to 2.3 percentage points. Here is its reasoning:

- Historical requirement (2010s): ~ 1.7 pp

- Recent years (2022 to 2025): ~ 2.6 pp

- Estimated 5-year typical spread: ~ 2.1 to 2.3 percentage points

Using these spread price quotes, we can now complete our five-year mortgage rate forecast.

Learn more: How to get the least expensive mortgage rate possible

The 5-year mortgage rate projection

Using the Treasury projection from above, we add the spread in between the bond market and 30-year fixed mortgage rates to put together a five-year projection:

Find out more: When will mortgage rates go back down to 6%?

The margin of mistake

Obviously, these are long-range price quotes based on historical standards and broad expectations. All of these numbers could be tossed out the window if any of the following happens:

1. 10-year Treasurys outshine or underperform the forecast. For instance, yields could crash in a severe economic obstacle, such as an economic crisis.

2. The spread in between Treasurys and mortgage rates narrows - or significantly broadens.

3. Monetary policy, as driven by the Federal Reserve, significantly modifications.

Mortgage rate predictions for the next 5 years FAQs

Will we ever see a 3% mortgage rate again?

There is no projection that forecasts a 3% mortgage rate in the next 5 years. However, who saw such low mortgage rates on the horizon in 2007 when rates were about where they are now? Things like the Great Recession and a global pandemic are seldom on the radar, and such black swan events are what it takes to move mortgage rates into the cellar.

Will mortgage rates drop in the next five years?

Based upon the price quotes above, rates are not anticipated to drop considerably in the next five years. However, a recession or other unidentified interruption to the economy (such as a financial collapse or pandemic) might change the outlook.

Is it better to fix a rate for 2 or five years?

If you are thinking about an adjustable-rate mortgage with an initial fixed-rate duration, you'll initially want to consider for how long you'll in fact remain in the home you are financing. Then the long-term mortgage rate forecasting starts. The very best concept is most likely to select the initial term that best fits your current spending plan.

What will mortgage rates remain in 2027?

The analysis above predicts 2027 mortgage rates to be around 6.2% to 6.4%.

Laura Grace Tarpley edited this short article.

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