Mortgage Rate Forecast: What Experts Predict for the Next 5 Years (2024-2030)

Mortgage interest rates have increased over the last few weeks, prompting questions about the long-term trajectory of borrowing costs for homebuyers and refinancers. A comprehensive analysis updated on March 30, 2026, combines expert economic projections with artificial intelligence data to forecast mortgage rates through 2030. The findings suggest that rates are not expected to drop significantly in the next five years barring major economic disruptions.

The forecast relies heavily on the yield of the 10-year U.S. Treasury note, which serves as a primary indicator for mortgage rates. While mortgage rates and Treasury yields typically move in the same direction, mortgage rates are generally higher due to additional risks factored in by lenders. This difference is known as the spread. To estimate future mortgage rates, analysts first examine where economists believe Treasury yields are headed.

Expert Projections for Treasury Yields

Michael Wolf, a global economist at Deloitte Touche Tohmatsu Ltd., outlined Treasury yield expectations in a December update from the Deloitte Global Economics Research Center. According to Wolf, the Federal Reserve is assumed to leave rates unchanged until December 2026. The average federal funds rate is projected to reach its neutral level of 3.125% in the middle of 2027.

Wolf further stated that the 10-year Treasury yield will ease gradually through the second quarter of 2027. The yield is expected to settle at 3.9% from the third quarter of 2027 through the end of 2030.

Other financial institutions offer somewhat different long-term outlooks. Goldman Sachs analysts expect the 10-year Treasury to rise over the long term, reaching 4.5% by 2035. Meanwhile, the Congressional Budget Office projects that the 10-year Treasury yield will reach 4.1% by the end of 2026, rising gradually to about 4.3% by 2030.

Understanding the Spread

To convert Treasury forecasts into mortgage rate predictions, analysts must account for the spread between the two. In recent years, this difference has hovered on either side of 2.5 percentage points. This represents a significant shift from the period between 2010 and 2020, when the spread was under two percentage points and often near 1.5 percentage points.

Data from March 5, 2026, illustrates the recent narrowing of this gap. On that date, the 10-year Treasury yield was 4.09%, and the 30-year fixed mortgage rate was 6.00%. The resulting spread was 1.91 percentage points. This compression is one reason mortgage rates have decreased recently.

Artificial intelligence analysis suggests the spread may continue to normalize. The spread between 30-year fixed mortgage rates and the 10-year Treasury is driven by prepayment risk, credit risk, and supply and demand for mortgage-backed securities. The Federal Reserve’s quantitative tightening program widened spreads after 2022 as private markets absorbed more mortgage-backed securities. However, spreads began normalizing in late 2025 and are expected to continue tightening.

Bull and Bear Case Scenarios

Based on Treasury forecasts and assumed spreads, analysts have compiled a base case forecast alongside alternative scenarios. These estimates account for variables such as inflation, Federal Reserve monetary policy, and market volatility.

The Bull Case: A Soft Landing

The Fed successfully guides inflation back to 2% without a hard recession. Gradual FOMC rate cuts through 2027 pull the 10-year yield to 3.3% as the term premium compresses. The MBS spread normalizes toward its long-run average of 170 bps as QT ends and private MBS demand recovers. Result: a 30-year fixed rate near 5.00% by 2030.

The Bear Case: Persistent Inflation and Fiscal Pressure

Inflation remains sticky above 2.5% and mounting U.S. Fiscal deficits push the term premium higher, keeping the 10-year yield near 4.4 to 4.6%. The spread widens to 240 bps as market volatility and MBS supply weigh on secondary markets. Mortgage rates climb toward 7.00% by 2027 before easing slightly to 6.60% by 2030.

Factors That Could Alter Forecasts

These long-range estimates rely on historical norms and broad expectations. However, specific economic events could invalidate these projections. Analysts note several variables that could disrupt the forecast:

• The 10-year Treasurys could outperform or underperform the forecast. Yields might crash in a severe economic setback, such as a recession, or soar on mounting government deficits.
• The spread between Treasurys and mortgage rates could narrow or dramatically widen.
• Monetary policy driven by the Federal Reserve could change substantially.

Current analysis predicts 2027 mortgage rates to be near 6%. No forecast predicts a 3% mortgage rate in the next five years. While rates were low in the past, drastic events such as the Great Recession or a global pandemic were required to move mortgage rates to those levels. Such events are rarely on the radar during standard forecasting periods.

For borrowers considering an adjustable-rate mortgage with an initial fixed-rate period, experts recommend considering how long they plan to remain in the financed home. The best approach is to select the initial term that best suits the current budget, acknowledging that long-term rates are not expected to drop significantly without an unknown disruption to the economy.