Core Viewpoint - Mortgage rates have slightly decreased recently, but the long-term trajectory of borrowing costs remains uncertain, primarily influenced by the 10-year Treasury yield [1][2]. Treasury Yield and Mortgage Rates - Mortgage rates typically follow the 10-year Treasury yield, with a spread of a couple of percentage points separating them [2]. - Analysts look at Treasury yield forecasts to predict future mortgage rates [2]. Forecasts for Treasury Yields - Deloitte's global economist forecasts the 10-year Treasury yield to remain around 4.5% for the rest of 2023, with a gradual decline expected starting in 2026, reaching 4.1% by 2027 and maintaining that level through 2029 [3][4]. - Goldman Sachs and the Congressional Budget Office share similar long-term projections, with the 10-year yield expected to stabilize around 4.1% through 2027 and dip to 3.9% by 2029 [7]. Mortgage Rate Predictions - The spread between the 10-year Treasury yield and the average 30-year fixed mortgage rate has widened in recent years, often around 2.5 percentage points, compared to 1.5 to 2 points from 2010 to 2020 [8]. - Yahoo Finance's five-year mortgage rate forecast is based on projected Treasury yields and an estimated spread of 2.1 to 2.3 percentage points [9][10]. Five-Year Mortgage Rate Forecast - The forecasted mortgage rates for the next five years are as follows: - 2025: 6.6% – 6.8% with a Treasury yield of 4.5% and a spread of 2.1 – 2.3 [10] - 2026: 6.4% – 6.6% with a Treasury yield of 4.3% and a spread of 2.1 – 2.4 [10] - 2027: 6.2% – 6.4% with a Treasury yield of 4.1% and a spread of 2.1 – 2.5 [10] - 2028: 6.2% – 6.4% with a Treasury yield of 4.1% and a spread of 2.1 – 2.6 [10] - 2029: 6.2% – 6.4% with a Treasury yield of 4.1% and a spread of 2.1 – 2.7 [10]

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].