Mortgage rates have reached their lowest point in more than three years, according to data from Freddie Mac. The average rate for a 30-year fixed mortgage currently stands at 6.06%.
Forecasts for mortgage interest rates over the next five years are being developed by examining trends in the 10-year Treasury note market. These two rates typically move in similar directions, though a spread exists between them.
Michael Wolf, a global economist at Deloitte Touche Tohmatsu Ltd., provided Treasury yield expectations through 2030 in an updated U.S. economic forecast issued in September. "Although we anticipate short-term interest rates to decline in the next couple of years, long-term interest rates are expected to remain elevated," Wolf wrote. "Notably, we expect the 10-year Treasury yield to remain above 4.1% through 2030."
Goldman Sachs analysts project the 10-year Treasury to rise to 4.5% by 2035. The Congressional Budget Office forecasts the Treasury yield at 3.9% by the end of 2026, dropping to 3.8% by 2030. The Deloitte forecast, positioned between these predictions, serves as a baseline for analysis.
The spread between the 10-year Treasury and 30-year fixed mortgage rates has fluctuated around 2.5 percentage points in recent years. This marks a shift from the 2010-2020 period, when the spread was often near 1.5 percentage points.
As of January 15, the 10-year Treasury yield opened at 4.14%, with the 30-year fixed mortgage rate at 6.06%. The spread calculated to 1.92 percentage points. A narrower spread this week contributed to the decrease in mortgage rates.
GPT-5, an artificial intelligence model, suggested using a spread of 2.1 to 2.3 percentage points for forecasting. It cited a historical standard of approximately 1.7 percentage points in the 2010s and a recent average of about 2.6 percentage points from 2022 to 2025.
Combining Treasury forecasts with spread estimates yields a five-year mortgage rate projection. For 2027, rates are predicted to range from 6.28% to 6.48%.
These long-range estimates rely on historical norms and broad expectations. They could be invalidated if 10-year Treasury yields deviate significantly from forecasts, the spread between Treasurys and mortgage rates changes dramatically, or Federal Reserve monetary policy undergoes substantial shifts.
No forecast predicts mortgage rates returning to 3% within the next five years. Such low rates historically required drastic events like the Great Recession or a global pandemic, which are rarely anticipated.
Based on current estimates, mortgage rates are not expected to drop significantly over the next five years. However, a recession or other major economic disruption could alter this outlook.