My 10 Year Mortgage Rate Forecast: 6.6% in 2027, 6.1% by 2031

Nobody publishes a ten year mortgage rate forecast. Fannie Mae stops at 2027. The Mortgage Bankers Association stops at 2027. The listing sites stop at 2026. So I built my own, and in this article I am going to show you every input I used so you can check my work, disagree with me, and rebuild it yourself.

Four current mortgage rates, and they all disagree

Freddie Mac’s weekly survey came out Thursday at 7.03%, up from 6.95% the week before and 6.30% a year ago. Mortgage News Daily, which reads lender rate sheets daily, had Friday at 7.43%. Bankrate’s national average was 7.22%. Rocket Mortgage posted 7.375%. The Freddie Mac 15 year is 6.42%, which is 61 basis points under the 30 year.

The number that drives all of these is the 10 year Treasury, now at 5.17%. The 30 year Treasury is at 5.49%, the highest since 2004. That is what this whole forecast is built on.

The only equation you need

There is one equation and it has two parts. The 30 year mortgage equals the 10 year Treasury plus the spread.

Right now the 10 year Treasury is 5.17%. The spread is 185 basis points or 1.85%. Add them together and you get 7.02%. Freddie Mac says 7.03%. The equation reproduces today’s rate to one basis point.

The spread did not blow out. The Treasury market broke.

This is the part almost every housing video is getting wrong right now. The spread actually narrowed. On July 20 the spread was 195 basis points. On September 3 it was 197. On September 24 it was 185. It got tighter, not wider. The long run average is between 170 and 180 basis points. The 2023 peak was above 300. So we are close to normal.

All of the move to 7% is the Treasury market. It is not mortgage stress. It is the bonds.

So when will mortgage rates come down? When the 10 year comes down. Even if the spread drops to the low end of its average, you only lose about 15 basis points. You are still around 6.9%.

Every published forecast is already stale

Fannie Mae has the fourth quarter at 6.8%. The Mortgage Bankers Association has 6.8%. The Realtors have a 2026 forecast of 6.5% to 6.7%. Redfin has a full year average of 6.3%. The actual Freddie Mac rate on September 24 was 7.03%. Every one of them is below the real number.

Fannie Mae’s own footnote says its forecast is keyed to rates as of August 31, before the Fed hiked and before the bond selloff.

The long run anchors I used

The Congressional Budget Office projects the 10 year Treasury at 4.1% in 2026, 4.3% from 2027 to 2030, and 4.4% from 2031 to 2036. Add the average spread of 170 to 180 basis points to that 4.4% and you get a mortgage around 5.1% to 5.2% out in 2031 to 2036. So could we get into the fives? Absolutely. But that is quite a few Christmases away.

The Federal Reserve’s own longer run rate projection is 3.2%, from the September 16 projections. That is where the federal funds rate settles once the economy is at equilibrium, and that is not happening in the short term. The Fed has raised its own long run rate twice this year, and it is 20 basis points higher than a year ago. This is the same Fed that told us inflation was transitory. Six years later we are still above the 2% target.

Goldman Sachs sees a 4.5% 10 year Treasury by 2035. The Social Security trustees use a 2.3% real rate with 2.4% inflation. And the Fed is still shrinking its mortgage bond holdings, which sit at $1.91 trillion and are running off at $15 to $18 billion a month. That puts upward pressure on the spread.

My base case, one year through ten

Here is my opinion, and we will look back on this and see how close I came. Today the 10 year Treasury is 5.17%, the spread is 185, and the 30 year fixed is 7.03%.

• One year out, 2027: 6.6%. The hiking cycle ends and inflation cools toward the Fed’s own 2.3% projection. 10 year at 4.80, spread 185.
• Two years, 2028: 6.4%. 10 year at 4.60, spread tightening to 180 as rate volatility settles.
• Three years, 2029: 6.3%. 10 year at 4.50, spread 178.
• Four years, 2030: 6.2%. 10 year at 4.45, spread 175.
• Five years, 2031: 6.1%. 10 year at 4.40, spread 175. This is where the CBO’s own path lands.
• Ten years, 2036: 6.1%. 10 year at 4.40, spread 170 once the Fed finishes running off its mortgage bonds.

Here is why I trust the long end. My ten year figure, the CBO’s projection and Goldman Sachs’s framework all land between 6.1% and 6.2%. Three separate methods that never talked to each other land within a tenth of a point.

The honest range

Anybody showing you a confident single number for 2036 is showing you arithmetic dressed up as research. So here are the same six periods with the range around them.

• One year: 6.0% to 7.6%. Low if inflation breaks fast, high if the Fed keeps hiking.
• Two years: 5.6% to 7.5%.
• Three years: 5.3% to 7.5%.
• Four years: 5.2% to 7.5%.
• Five years: 5.0% to 7.5%. Low in a recession, high if the deficit keeps pushing the long end up.
• Ten years: 4.5% to 8.0%. Ten years is long enough for a whole regime change.

The range is the honest answer. If we knew the exact number, we would all be trillionaires.

For investors who want out faster, the 20 year fixed rides the same curve about a fifth of a point lower: 6.4% in 2027, 6.2% in 2028, 6.1% in 2029, 6.0% in 2030, 5.9% in 2031, and 5.9% in 2036. It is a niche product and some lenders do not offer it.

What each loan actually costs you

Take the median home with 20% down. That is $343,280 borrowed. Here is what it costs at this week’s rates.

• 30 year at 7.03%: $2,291 a month. Lowest payment, but you pay the bank $481,998 in interest over the life of the loan.
• 20 year at 6.83%: $2,627 a month. That is $336 more a month. Interest drops to $287,687 and you are done ten years sooner.
• 15 year at 6.42%: $2,975 a month. That is $684 more than the 30. Interest drops all the way to $192,267 and you own the home in 15 years, not 30.
• If rates hit 6.1%, my five year base case: the same 30 year loan costs $2,080 a month.
• If rates hit 8%, the high end of my range: $2,519 a month.

The 20 year trade is the one I want you to notice. $336 a month buys you $194,310 of saved interest and a decade of your life back. It only works if you actually stay in the home, and most people do not.

Work backwards from the rate you want

All of these assume today’s 185 basis point spread.

• A 5% mortgage needs the 10 year Treasury at about 3.15%. With the Fed’s long run rate at 3.2%, that means basically zero term premium. That is a recession or a regime change.
• A 6% mortgage needs the 10 year at about 4.15%. That is roughly where it sat in the first quarter of this year.
• A 7% mortgage needs nothing to happen. The 10 year is at 5.17 and the spread is 185. We are already here.
• An 8% mortgage needs either the 10 year at 6.15%, above its 2007 high, or the spread blowing back out to 2023 levels with the 10 year near 5. The spread path is faster.
• A 9% mortgage needs the 10 year at 7.15%, a level last seen in the early 1990s.

The lesson is that 8% does not require new Treasury highs. It only requires the spread to widen back to where it was two years ago.

Before you panic about 7%

Freddie Mac has tracked the 30 year fixed since April 1971. The decade average in the 1980s was 12.7%, and nobody stopped buying houses. The 1990s averaged 8.1%. The 2000s averaged 6.3%. The 2010s, the decade everyone thinks is normal, averaged 4.1%. The 2020s so far average 5.4%. The 55 year average is about 7.7%. Today’s 7.03% is still below the long run average. The 2010s were the anomaly, not the 2020s.

The all time high was 18.63% in the week of October 9, 1981. The annual average stayed in double digits every year until 1991, when it finally printed 9.25. The all time low was 2.65% in the week of January 7, 2021.

Why does this matter for the forecast? Rates do not snap back. The 1981 peak took a decade to work off, and that was with inflation collapsing from 13% to 4%. Get inflation down and mortgage rates will follow. Anyone telling you to wait a year for a big drop is selling you something. My own model only takes 90 basis points off over five years, and that is the optimistic honest answer.

Four things that could break this forecast

• Every long run anchor I used assumed the Fed would cut. They are still raising.
• The spread can widen back out, and it would not take much. If it goes to 300 again like 2023, that is another full percent on your mortgage rate with no change in the 10 year. We could see 8%.
• The Fed is still shrinking its mortgage bond holdings, which puts pressure on the spread.
• The deficit is the wild card nobody can model.

The dates I am watching

• September 30: August personal consumption expenditures inflation, the Fed’s preferred gauge.
• Mid October: Fannie Mae and the Mortgage Bankers Association both publish new forecasts. Those will finally contain the hike.
• October 28: the next Fed meeting.
• December 9: the next Fed projections and the dot plot. Watch whether the long run rate moves up again.

What this means for you

If you are buying today at 7.1% and my one year number of 6.6% is right, you could be looking at a refinance. The old rule I was taught is that if you can drop half a point and you are going to stay in the home, go ahead and shop around. Personally I like to wait for a full point if I can. At half a point I start looking. A full point is a no brainer. My model puts the move from 7% to 6% somewhere around 2029.

If you are waiting for 5% to buy, you may be waiting a decade. My base case only takes 90 basis points off over five years.

For anybody who is struggling to get a home, it is not you. There is a brick wall in front of the American dream. Rates in the 80s and 90s were in double digits, but homes were dirt cheap compared to income. Inflation has crushed that ratio since.

Keep reading on Stock Moe

• Mortgage Rates Hit 7.45%: What Changed and What It Costs You
• Mortgage Rates Hit 7.50%: 54 Cities Falling, No Crash Yet
• Week Ahead: PCE, Jobs Report, Micron and a 5.17% 10 Year

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Sources

• Freddie Mac Primary Mortgage Market Survey, September 24, 2026, and the historical series since April 1971
• Mortgage News Daily 30 year rate index, September 25, 2026
• Bankrate national average and Rocket Mortgage posted rates
• US Treasury daily yield curve, 10 year and 30 year yields
• Congressional Budget Office 10 year Treasury projections, 2026 to 2036
• Federal Reserve Summary of Economic Projections, September 16, 2026
• Goldman Sachs 10 year Treasury framework and Federal Reserve mortgage bond holdings
• Fannie Mae, Mortgage Bankers Association, National Association of Realtors and Redfin mortgage rate forecasts

I am not a financial advisor and nothing in this article is financial advice. Everything here is my own opinion, for educational and entertainment purposes only. Do your own research and talk to a licensed professional before you make any financial decision.