Mortgage rate projections for the next 5 years

Core Insights - Mortgage rates have decreased by half a percentage point over the past year, but long-term predictions indicate they may remain elevated due to various influencing factors, primarily the 10-year Treasury yield [1][4] Group 1: Mortgage Rate Trends - Mortgage rates are closely linked to the government bond market, particularly the 10-year Treasury note rates, which serve as a basis for forecasting mortgage rates [2] - The current spread between the 10-year Treasury yield and 30-year fixed mortgage rates has been around 2.5 percentage points, a significant increase from the under two percentage points observed from 2010 to 2020 [6] - As of December 4, the 10-year Treasury yield was 4.11%, while the 30-year fixed mortgage rate was 6.19%, resulting in a spread of 2.08 percentage points [6] Group 2: Long-term Treasury Yield Forecasts - Deloitte's forecast anticipates the 10-year Treasury yield to remain above 4.1% through 2030, while Goldman Sachs predicts it will rise to 4.5% by 2035 [4][5] - The Congressional Budget Office (CBO) projects the Treasury yield to be 3.9% by the end of 2026 and drop to 3.8% by 2030, placing Deloitte's forecast as a middle ground between Goldman and CBO predictions [5] Group 3: Mortgage Rate Predictions - The five-year mortgage rate forecast suggests rates will be around 6.28% to 6.48% by 2027, with no predictions indicating a return to 3% rates in the next five years [11][10] - Significant economic disruptions, such as a recession or financial collapse, could alter the current mortgage rate outlook, but no substantial drops in rates are expected in the near term [12]