Projected mortgage interest rates for the next 5 years

Core Viewpoint - The article discusses the long-term outlook for mortgage rates in light of recent Federal Reserve interest rate cuts and economic conditions, emphasizing the correlation between mortgage rates and the 10-year Treasury yield [1][2]. Treasury Yield Forecast - Economists predict the 10-year Treasury yield will remain around 4.5% for the remainder of 2023, with a gradual decline to 4.1% by 2027 [4][5]. - Goldman Sachs analysts concur with the forecast that the 10-year Treasury yield will stabilize near 4.1% through 2027 [4]. Mortgage Rate Spread - The spread between the 10-year Treasury yield and 30-year fixed mortgage rates has averaged around 2.5 percentage points in recent years, a significant increase from the under 2 percentage points spread observed from 2010 to 2020 [6]. - As of September 24, 2023, the 10-year Treasury yield was 4.16%, resulting in a 2.14 percentage point spread with a 30-year fixed mortgage rate of 6.3% [6]. Five-Year Mortgage Rate Forecast - The five-year mortgage rate forecast estimates rates to be around 6.2% to 6.4% by 2027, based on the projected Treasury yields and the historical spread [9]. - The article indicates that mortgage rates are not expected to drop significantly in the next five years, barring unforeseen economic disruptions [10].