NEW YORK—Mortgage rates are expected to remain relatively elevated over the next several years, with modest declines possible but little chance of returning to the historically low levels seen during the pandemic, according to a new analysis .
Mortgage rates tend to move in tandem with the yield on the 10-year U.S. Treasury note, which lenders use as a benchmark when pricing home loans. Mortgage rates are typically higher than Treasury yields because lenders price in additional risks, creating what is known as the “spread,” Yahoo Finance reported.
Economists’ forecasts for Treasury yields suggest mortgage rates could remain around current levels for several years. Michael Wolf, a global economist with Deloitte Touche Tohmatsu Ltd., wrote in a December update from the Deloitte Global Economics Research Center that the Federal Reserve is expected to hold interest rates steady until late 2026, Yahoo Finance reported.
Forecast for 10-year Treasury
Wolf projected the 10-year Treasury yield will gradually ease through the second quarter of 2027 before settling around 3.9% from the third quarter of 2027 through the end of the decade, according to Yahoo Finance.
Other forecasts point to slightly higher long-term yields. Analysts at Goldman Sachs expect the 10-year Treasury to rise to about 4.5% by 2035, while the Congressional Budget Office projects the benchmark yield will reach about 4.1% by the end of 2026 and gradually climb to roughly 4.3% by 2030.
As the analysis noted and CUs know well, mortgage rates are also influenced by the spread between Treasury yields and 30-year fixed mortgage rates, which in recent years has hovered around two percentage points. For example, as of March 5 the 10-year Treasury yield stood at 4.09%, while the average 30-year fixed mortgage rate was about 6%, a spread of roughly 1.9 percentage points, Yahoo Finance reported.
What AI Analysis Revealed
Artificial intelligence analysis compiled by Anthropic’s Claude suggested the spread could gradually narrow as market conditions normalize. The spread widened after 2022 as the Federal Reserve reduced its holdings of mortgage-backed securities, forcing private markets to absorb more supply, but it has begun tightening again since late 2025.
Using those assumptions, Yahoo Finance reported that mortgage rates could hover near 6% by 2027 and remain in a similar range through the end of the decade.
Alternative Scenarios
Alternative scenarios could produce very different outcomes. In a “bull case” where inflation falls back to the Federal Reserve’s 2% target and interest rates decline gradually, mortgage rates could fall to about 5% by 2030.
In a more pessimistic scenario where inflation remains persistent and government deficits push long-term yields higher, mortgage rates could climb toward 7% by 2027 before easing slightly to about 6.6% by 2030, according to the analysis cited by Yahoo Finance.
Economists cautioned that long-term forecasts are uncertain and could change significantly if economic conditions shift, including a recession, major changes in Federal Reserve policy or unexpected financial disruptions.
