Mortgage Rates: what the Next 5 Years May Bring

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Mortgage rate forecasts for the next 5 years

The length of time will mortgage rates remain in the mid- to upper-6% range? Mortgage rates of interest are determined by lots of factors, a significant one being the 10-year Treasury yield. At Yahoo Finance, we have actually created a five-year mortgage rate projection, developed on a 10-year yield correlation, that offers some insight.

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Mortgage rates are tuned to the government bond market

Mortgage rate forecasts might best be stemmed from 10-year Treasury note trends. While the two rates often track in the exact same direction, there is a spread in between them that we will represent below.

First, let's understand where Treasury yields are headed in the next 5 years. We'll combine human analysis with information pulled from synthetic intelligence to put together a prediction.

Economists' 5-year projection for Treasury rates

Michael Wolf is a global economic expert at Deloitte Touche Tohmatsu Ltd. In June, the Deloitte Global Economics Proving ground issued an upgraded U.S. economic projection in which Wolf laid out the firm's Treasury yield expectations over the next five years.

"We anticipate the 10-year Treasury yield to hover near 4.5% for the rest of this year, despite 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 starts to decrease slowly in 2026, falling to 4.1% by 2027 and remaining there through completion of 2029."

Let's chart that forecast.

That's very little motion. Goldman Sachs analysts agree, stating the 10-year Treasury will stay near 4.1% through 2027.

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

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

Estimating a 5-year spread

As we pointed out up leading, the 10-year Treasury and 30-year fixed mortgage rates are separated by a spread. That distinction between the two has actually been on either side of 2.5 percentage points in recent years. That's a considerable change when compared to the spread from 2010 to 2020 when it was under two percentage points - and frequently 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 percentage 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 fixed mortgage rate was 6.63%. The spread was 6.58 - 4.29 = 2.29 portion points.

The most recent variation of artificial intelligence, GPT-5, suggested using a spread of 2.1 to 2.3 portion 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 portion points

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

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The 5-year mortgage rate projection

Using the Treasury projection from above, we include the spread between the bond market and 30-year set mortgage rates to compile a five-year projection:

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

The margin of error

Of course, these are long-range estimates based upon historic standards and broad expectations. All of these numbers could be thrown away the window if any of the following takes place:

1. 10-year Treasurys outperform or underperform the projection. For example, yields could crash in an extreme economic obstacle, such as an economic crisis.

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

3. Monetary policy, as driven by the Federal Reserve, considerably changes.

Mortgage rate forecasts for the next five years FAQs

Will we ever see a 3% mortgage rate once again?

There is no forecast that forecasts a 3% mortgage rate in the next five years. However, who saw such low mortgage rates on the horizon in 2007 when rates had to do with where they are now? Things like the Great Recession and an international pandemic are seldom on the radar, and such black swan occasions are what it takes to move mortgage rates into the cellar.

Will mortgage rates drop in the next five years?

Based on the price quotes above, rates are not expected to drop considerably in the next five years. However, an economic downturn or other unidentified interruption to the economy (such as a financial collapse or pandemic) could alter the outlook.

Is it much better to fix a rate for two or 5 years?

If you are thinking about an adjustable-rate mortgage with an initial fixed-rate period, you'll initially wish to think about how long you'll actually stay in your home you are funding. Then the long-term mortgage rate forecasting begins. The very best concept is most likely to pick the initial term that finest fits your existing budget.

What will mortgage rates be in 2027?

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

Laura Grace Tarpley edited this post.

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