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Many experts say there’s potential for rates to come down even more over the next year, though future changes can't be guaranteed.
For over 50 years, the 30-year fixed mortgage rate has closely followed the movement of the 10-year treasury yield, which is a widely watched benchmark for long-term interest rates (see graph below):
Source: Macrotrends, 10 Year Treasury Yield Bond Rat Yield Chart, October 2025 (data as of publication date; example for illustrative purposes only)
When the treasury yield climbs, mortgage rates tend to follow. And when the yield falls, mortgage rates typically come down.
It’s been a predictable pattern for over 50 years. So predictable, that there’s a number experts consider normal for the gap between the two. It’s known as the spread, and it usually averages about 1.76 percentage points, or what you sometimes hear as 176 basis points.
Over the past couple of years, though, that spread has been much wider than normal. Why? Think of the spread as a measure of uncertainty in the market. When there’s lingering uncertainty in the economy, the gap often widens beyond its usual norm. That’s one of the reasons why mortgage rates have been unusually high over the past few years.
But here’s a sign for optimism. Even though there’s still some lingering uncertainty related to the economy, that spread is starting to shrink as the path forward is becoming clearer (see graph below):
Source: Wall Street Journal, US 10 Year Treasury Note, October 2025 (data as of publication date; example for illustrative purposes only)
And that may open the door for mortgage rates to come down even more. As a recent article from Redfin explains:
“A lower mortgage spread equals lower mortgage rates. If the spread continues to decline, mortgage rates could fall more than they already have.”
It’s not just the spread, though. The 10-year treasury yield, itself, is also expected by some analysts to come down in the months ahead. So, when you combine a lower yield, with a narrowing spread, you have two factors that could potentially push mortgage rates down going into next year.
This long-term relationship is a big reason why you see experts currently projecting mortgage rates may ease, with a fringe possibility they’ll hit the upper 5s toward the end of next year. Forecasts are based on current market data, and are subject to change.
Here's how it works. Take the 10-year treasury yield, which is sitting at about 4.09% at the time this article is being written, – typically serves as a benchmark for long term mortgage rates. Historically when you add the average spread of about 1.76% the resulting estimated mortgage rate would be roughly 5.85% (This is a simplified example based on historical averages and current data, not a forecast. Actual rates will vary based on market conditions, lender pricing, and borrower qualification - see graph below):
But remember, all of that can change as the economy shifts. And know for certain that there will be ups and downs along the way.
How these dynamics play out will depend on where the economy, the job market, inflation, and more go from here. But the 2026 outlook is currently expected to be a gradual mortgage rate decline. And as of now, things are starting to move in the right direction.
Keeping up with all of these shifts can feel overwhelming. That’s why having an experienced lender on your side matters. If you want real-time updates on mortgage rates, connect with a First Federal Bank Loan Officer so you have someone to keep you in the loop and help you plan your next move.