Here’s the Deloitte 10-year Treasury five-year forecast.
Other projections suggest slightly higher long-term yields. For instance, analysts at Goldman Sachs anticipate the 10-year Treasury will climb to 4.5% by 2035.
Meanwhile, the Congressional Budget Office (CBO) estimates that the 10-year Treasury yield will hit 4.1% by the close of 2026, with a gradual increase to approximately 4.3% by 2030.
Anthropic’s Claude artificial intelligence synthesized these predictions into a consensus forecast, which we utilize below.
Estimating a five-year spread
As noted, a spread exists between the 10-year Treasury and 30-year fixed mortgage rates. In recent years, this gap has hovered around 2.5 percentage points. This represents a notable shift from the 2010–2020 period, when the spread was consistently under two percentage points, often remaining near 1.5.
Using a 2.0 percentage point spread, here is an example of how Treasurys and mortgage rates compare:
Here’s a recent example: As of September 9, the 10-year Treasury yield was 4.88%, and the 30-year fixed mortgage rate was 6.76%. The spread was 6.76 – 4.88 = 1.88 percentage points.
Claude AI suggested using a variable spread that slowly declines:
“The spread is stickier than previously assumed. Fannie Mae and Freddie Mac’s MBS buyback program, launched January 8, 2026, has prevented the spread from widening further but has not meaningfully narrowed it.”
The base case for Claude’s spread assumptions now begins at 2.00 percentage points in 2027, gradually declining to 1.90 percentage points in 2031.”
Using these spread estimates, we can now complete our five-year mortgage rate forecast.
The five-year mortgage rate forecast
Using the Treasury forecast, we add the Claude-suggested base case assumed spread between the bond market and 30-year fixed mortgage rates to compile a five-year forecast:
Five-Year Mortgage Rate Forecast
Using the Treasury forecast from above, we add the Claude-suggested base case assumed spread between the bond market and 30-year fixed mortgage rates to compile a five-year forecast:
Considering bull and bear cases
While this forecast relies on a base case involving gradual spread normalization, easing inflation, and moderate Fed policy, Claude AI also developed “bull” and “bear” scenarios:
The bull case: a soft landing. “The Fed successfully guides inflation back to 2% without a hard recession. FOMC rate cuts resume through 2027–2028, pulling the 10-year yield toward 3.30%. The MBS spread narrows to 1.75 pp by 2031 as the Fed’s MBS runoff nears completion, and Fannie/Freddie buybacks continue. The 30-year mortgage rate falls to approximately 5.05% by 2031 — meaningfully lower than today but well above the pre-pandemic era.
The bear case: persistent inflation and fiscal pressure: “Inflation remains above 2.5%, fiscal deficits expand, and foreign holders reduce their Treasury exposure, pushing the 10-year yield above 5%. The spread widens to 2.40 pp as MBS volatility rises and private investors demand more compensation. The 30-year mortgage rate breaches 7% in 2027–2028, easing only marginally to 6.90% by 2031 as conditions stabilize.
The margin of error
Naturally, these are long-term projections based on historical patterns and general expectations. These figures could change significantly if any of the following occur:
The 10-year Treasury performance dering a severe economic downturn, such as a recession, or spike due to rising government deficits. We have already witnessed how unpredictable interest rates can be when influenced by unexpected events like geopolitical instability
The spread between Treasury notes and mortgage rates narrows or widens significantly.
Monetary policy, directed by the Federal Reserve, undergoes a substantial shift.
Mortgage rate predictions for the next 5 years: FAQs
Will mortgage interest rates ever be 3% again?
No current forecast predicts a return to 3% mortgage rates within the next five years. However, few people anticipated such low rates in 2007, when they were at levels similar to today. Major events like the Great Recession and a global pandemic are rarely foreseen, and it typically takes such extreme circumstances to drive mortgage rates to those historic lows.
What will mortgage rates be in 2027?
The analysis above suggests that mortgage rates in 2027 will hover near 6.20%.
Will mortgage rates drop in the next 5 years?
Based on the estimates provided, mortgage rates are projected to moderate over the next five years. That said, a recession or other unforeseen economic disruption—such as war, financial instability, or another pandemic—could accelerate the decline in rates.
Is it better to fix a rate for 2 or 5 years?
If you are evaluating an adjustable-rate mortgage with an initial fixed-rate period, you should first consider how long you intend to remain in the property. From there, you can weigh the long-term mortgage rate forecasts. The most prudent approach is generally to choose the initial term that best aligns with your current financial budget.
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