The Federal Reserve has made it official: Interest rate moves are on hold. Following its January 28 meeting, the Fed announced it was still assessing the economic outlook and declined to cut the federal funds rate. So, where are rates headed in the next five years, and should you wait for mortgage rates in particular to decrease before buying or refinancing? Mortgage interest rates are determined by several factors, all of which can give us clues about the future. Mortgage rates are tuned to the governm ...

Mortgage rates have dropped by a half-point over the last year, according to Freddie Mac. But where are rates headed in the long term? Mortgage interest rates are determined by several factors, with the 10-year Treasury yield being a primary one. Mortgage rates are tuned to the government bond market Mortgage rate forecasts may be best derived from trends in 10-year Treasury note rates. While the two rates often track in the same direction, there is a spread between them that we will account for below. ...

Core Insights - The article discusses the long-term outlook for mortgage rates following the end of the government shutdown, 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 and remaining stable through 2029 [4][5]. - Goldman Sachs analysts concur with the forecast that the 10-year Treasury yield will stay near 4.1% until 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 two percentage points observed from 2010 to 2020 [6]. - As of November 14, the 10-year Treasury yield was 4.06%, while the 30-year fixed mortgage rate was 6.24%, resulting in a spread of 2.18 percentage points [6]. AI Insights on Spread - Recent AI analysis suggests a spread of 2.1 to 2.3 percentage points based on historical data, indicating a shift in the mortgage rate landscape [7]. Five-Year Mortgage Rate Forecast - The five-year mortgage rate forecast combines the Treasury yield predictions with the estimated spread, projecting mortgage rates to be around 6.2% to 6.4% by 2027 [11]. Economic Disruptions - The article notes that unforeseen economic events, such as a recession or financial crisis, could significantly alter the mortgage rate outlook [12].