Current mortgage rates may not be done swinging, but Deloitte sees a path to calmer borrowing costs over the next several years. Michael Wolf, the firm’s economist, said the 10-year Treasury yield should ease gradually through the second quarter of 2027 and then settle at 3.9% from the third quarter of 2027 through the end of 2030.
That matters because mortgage rates usually move in the same direction as the 10-year Treasury, even though they run higher because lenders build in extra risk. On March 5, the 10-year Treasury yield was 4.09% and the 30-year fixed mortgage rate was 6.00%, leaving a spread of 1.91 percentage points. For anyone buying a home or weighing a refinance, that gap is often as important as the Treasury yield itself.
Wolf’s forecast is tied to an interest-rate path that assumes the Federal Reserve leaves rates unchanged until December 2026, with the average federal funds rate reaching its neutral 3.125% in the middle of 2027. That is the point at which Deloitte expects Treasury yields to begin settling into a lower, flatter range after a period of gradual decline.
The forecast also lands against a mortgage market that has been volatile since the beginning of the Middle East conflict. Mortgage interest rates are driven by more than the Treasury benchmark, and the spread between 30-year fixed mortgage rates and the 10-year Treasury has been on either side of 2.5 percentage points in recent years, far wider than it was from 2010 to 2020, when it was under two percentage points and often near 1.5.
That wider spread is where the disagreement starts. Goldman Sachs analysts see the 10-year Treasury climbing to 4.5% by 2035, while the Congressional Budget Office projects 4.1% by the end of 2026 and about 4.3% by 2030. If those higher yield forecasts prove closer to the mark, mortgage costs could stay elevated even if the Federal Reserve eventually stops tightening.
The spread itself is influenced by prepayment risk, credit risk and supply and demand for mortgage-backed securities, and the Federal Reserve’s quantitative tightening after 2022 pushed it wider as private investors absorbed more of those bonds. Spreads have started normalizing in late 2025 and are expected to keep tightening, but the next benchmark in Deloitte’s view is December 2026. By then, the market will know whether mortgage rates are following Treasury yields down or whether lenders keep charging more than the models expect.
