Mortgage rates are expected to stay above the historic lows seen in previous years, with forecasts pointing to a gradual decline rather than a sharp drop through 2030.
Mortgage Rates Follow Bond Market Trends
One of the main indicators used to predict mortgage rates is the yield on the 10-year US Treasury note. Mortgage rates generally move in the same direction as Treasury yields, although lenders add an extra margin to reflect lending risks. This difference between the two rates is known as the mortgage spread.
Economists use Treasury forecasts and expected changes in the spread to estimate future borrowing costs for homeowners.
Forecasts Suggest Slow Rate Declines Ahead
Research from Deloitte Touche Tohmatsu Ltd. suggests the 10-year Treasury yield could gradually fall after 2026. The forecast expects the yield to move from around 4.05% in 2026 towards 3.92% between 2028 and 2030.
Other projections suggest rates could remain higher for longer. The Congressional Budget Office expects the 10-year Treasury yield to reach around 4.3% by 2030, while Goldman Sachs has predicted higher long-term yields.
Based on these estimates, mortgage rates are unlikely to return quickly to the ultra-low levels seen during the pandemic period.
| Year | 10-year US Treasury yield forecast |
|---|---|
| 2026 | 4.05% |
| 2027 | 3.95% |
| 2028 | 3.92% |
| 2029 | 3.92% |
| 2030 | 3.92% |
Mortgage Rate Forecast Through 2030
A base forecast combining Treasury expectations and mortgage spreads suggests mortgage rates could move gradually lower over the next five years. In 2026, 30-year fixed mortgage rates are projected to average around 6.25%.
The forecast then points to rates near 6.05% in 2027, followed by around 5.85% in 2028. By 2029, rates could reach about 5.75%, with projections placing them around 5.70% in 2030. These estimates suggest borrowers may see some easing, but not a return to the 3% mortgage rates seen during the pandemic.
| Year | Treasury forecast | Percentage point spread | Mortgage rate forecast |
|---|---|---|---|
| 2026 | 4.10% | 2.15 | 6.25% |
| 2027 | 4.00% | 2.05 | 6.05% |
| 2028 | 3.90% | 1.95 | 5.85% |
| 2029 | 3.90% | 1.85 | 5.75% |
| 2030 | 3.90% | 1.80 | 5.70% |
Economic Conditions Could Change the Outlook
Mortgage rate forecasts depend on several factors, including inflation, Federal Reserve decisions, government borrowing and financial market conditions. A stronger decline in inflation could push rates lower, while persistent price pressures or higher government debt could keep borrowing costs elevated.
In a more optimistic scenario, mortgage rates could approach 5% by 2030 if inflation continues to slow and financial markets become more stable. A less favourable scenario could see rates remain closer to 7% if inflation stays high and lenders demand higher returns.
Buyers May Need to Adjust Expectations
Experts do not expect mortgage rates to return to 3% over the next five years under current forecasts. For people looking to buy a home or refinance, waiting for a major fall in rates may not necessarily result in lower costs.
The best decision depends on personal finances, household budgets and how long someone plans to own a property.The housing market is likely to continue operating with borrowing costs above the levels many buyers experienced before the recent period of inflation and economic uncertainty.
