Where Mortgage Rates Could Head Over the Next 5 Years

Mortgage rates are climbing as 2026 winds down, and many would-be buyers are wondering if relief is coming.

Here's what the latest forecasts say.

The short answer

A forecast reported by Yahoo Finance suggests rates will ease over time, but stay above 6% through 2031.

The range of possible outcomes is wide.

Why Treasury yields matter

Mortgage rates tend to follow the 10-year U.S. Treasury yield.

Lenders add a cushion on top of that yield, known as the "spread."

Here's how the spread works, using Yahoo Finance's example:

• 10-year Treasury yield: 4%
• Spread: 2 percentage points
• Resulting mortgage rate: 6%

Where things stand today

Yahoo Finance reports the 30-year fixed rate was 7.40% on October 15.

The 10-year Treasury yield hit 5% in September for the first time since July 2007.

A survey of 71 economists now expects the 10-year to end 2026 at 5.1%, up from a 4.4% forecast in July.

Those same economists see yields easing only slowly, to 4.78% by the end of 2027.

What the experts expect for Treasury yields

Deloitte's economists see yields settling lower over the next five years, according to Yahoo Finance.

Deloitte expects the Fed to start cutting rates again at the end of 2027, as spending growth and inflation cool.

Yahoo Finance also cites a Congressional Budget Office projection of 4.4% by 2031.

The spread is wider than it used to be

Before 2020, the gap between Treasury yields and mortgage rates was often near 1.5 percentage points.

In recent years, it has hovered around 2.5 points, per Yahoo Finance.

The AI-assisted forecast assumes it narrows slowly, from 2.15 points in 2027 to 1.98 points in 2031.

The base-case mortgage rate forecast

Adding the spread to a slightly adjusted Treasury forecast gives this path for the 30-year fixed rate:

Best and worst cases

The forecast also sketches two alternative scenarios.

Bull case (rates fall faster):

• The Fed shifts course in early 2027.
• Inflation returns to 2%.
• Mortgage rates slide from 6.55% in 2027 to 5.38% in 2031.

Bear case (rates stay high):

• Yields keep climbing as government debt grows.
• Rates start at 7.7% in 2027 and peak at 8.05% in 2028.
• They then ease to 7.25% by 2031.

What could throw off the forecast

Long-range predictions come with big caveats.

Any of these could change the picture:

• Treasury yields beating or missing expectations, such as in a recession
• The spread narrowing or widening sharply
• A major shift in Federal Reserve policy
• Surprises like geopolitical conflict or a financial shock

Experts are already split on how far the Fed will go.

One Schwab strategist, for example, expects the 10-year yield to reach 5% by year-end before the yield curve flattens into early 2027.

Another economist expects it to approach 6% in 2027.

Will rates ever return to 3%?

No forecast Yahoo Finance reviewed points to 3% mortgages in the next five years.

It would likely take a major shock, such as a deep recession.

So, when should you buy?

Nobody can time rates perfectly.

A practical approach is to buy when the monthly payment fits your budget.

If you're considering an adjustable-rate mortgage, first think about how long you plan to stay in the home.

You may be able to refinance later if rates fall.

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