NEW YORK, NY — Mortgage rates are still climbing as 2026 heads toward its fourth quarter, and a new five-year forecast suggests borrowers should not expect a quick return to the ultra-low borrowing costs of the pandemic era. The outlook instead points to a slow normalization that depends on inflation, Federal Reserve policy, and the long-running gap between Treasury yields and mortgage pricing.
The analysis looks at where 30-year fixed rates may land through 2031 by starting with the 10-year U.S. Treasury note, then adding an assumed spread that reflects lender risk and market conditions. The result is a path that keeps home loans elevated by historical standards, even if rates gradually drift lower.
Why the 10-year Treasury still drives mortgage pricing
One of the clearest signals for mortgage rates is the 10-year Treasury yield. Mortgage rates and Treasury yields usually move in the same direction, although mortgage rates are higher because lenders build in extra risk and costs. That difference is called the spread.
In recent years, that spread has often sat above 2.5 percentage points, a wider gap than the 2010 to 2020 period, when it was often under 2 points and sometimes close to 1.5. Using September 9 figures as an example, the 10-year Treasury yield was 4.88% while the 30-year fixed mortgage rate was 6.76%, a spread of 1.88 points.
The forecast combines economic projections with artificial intelligence to estimate how both Treasury yields and lender spreads could evolve over the next five years. That framework produces a more measured view than a simple prediction that rates will suddenly fall back to past lows.
Deloitte, Goldman Sachs, and the CBO see Treasury yields staying firm
Deloitte Global Economics Research Center economist Michael Wolf said stronger inflation and solid payroll growth could push the Federal Reserve to raise rates before the end of this year. He also wrote that the central bank is unlikely to keep rates elevated for long and expects a cut before the end of 2027, helped by lower oil prices and easing inflation.
Other forecasts are less subdued on the long end. Goldman Sachs analysts see the 10-year Treasury rising to 4.5% by 2035. The Congressional Budget Office projects the yield at 4.1% by the end of 2026, with a gradual climb to about 4.3% by 2030.
Anthropic’s Claude AI then combined those outlooks into a consensus forecast used in the mortgage estimate. That matters because even small changes in the Treasury market can move housing costs for buyers and homeowners who are thinking about refinancing.
Spread assumptions keep mortgage rates above Treasury yields
The mortgage forecast does not rely on Treasury yields alone. It also assumes a continuing spread between bond-market rates and mortgage rates, starting at 2.00 percentage points in 2027 and slowly narrowing to 1.90 points by 2031.
Claude described the spread as sticky, noting that Fannie Mae and Freddie Mac’s mortgage-backed securities buyback program, launched on January 8, 2026, has prevented the gap from widening further but has not materially narrowed it. That means mortgage rates may not fall as quickly as some borrowers hope even if Treasury yields ease.
Historically, the spread can make a large difference. A 4% 10-year Treasury rate, for example, would translate to a 6% mortgage rate under a 2-point spread. The forecast uses that relationship to estimate where 30-year fixed loans could stand through the rest of the decade.
The base-case path points to modest relief, not a crash in borrowing costs
Under the base case, mortgage rates ease gradually as inflation cools and monetary policy normalizes. The model’s path suggests rates in 2027 around 6.20%, with only modest movement after that as Treasury yields and lender spreads adjust.
By 2031, the forecast still does not point to a return to the exceptionally low rates many households saw during the pandemic. Instead, it suggests a market that may become somewhat easier to navigate for buyers and refinancers, but still expensive compared with the 2010s.
That distinction matters for home shoppers deciding whether to act now or wait. A slower decline means timing the market could still be difficult, especially if home prices, inventory, or personal finances change before rates do.
Bull and bear cases show how much could change between now and 2031
Claude’s bull case assumes a soft landing in which the Federal Reserve gets inflation back to 2% without a hard recession. In that scenario, rate cuts continue through 2027 and 2028, the 10-year yield moves toward 3.30%, and the mortgage spread narrows to 1.75 points by 2031.
That best-case path would put the 30-year fixed mortgage rate near 5.05% by 2031, which would be lower than today but still above pre-pandemic levels. The bear case is much harsher.
In that version, inflation stays above 2.5%, deficits widen, and foreign holders trim Treasury exposure. The 10-year yield rises above 5%, the spread widens to 2.40 points, and mortgage rates climb above 7% in 2027 and 2028 before easing only slightly to 6.90% by 2031.
Why long-range rate forecasts still carry a wide margin of error
Any long-range mortgage forecast depends on assumptions that can change quickly. A recession could drive Treasury yields sharply lower, while larger government deficits could send them higher. Geopolitical unrest can also shake markets in ways that are hard to model in advance.
The spread between Treasury rates and mortgage rates can also move in either direction. If lender demand changes, or if mortgage-backed securities become more volatile, the gap could narrow or widen faster than expected. Federal Reserve policy adds another layer of uncertainty.
For borrowers, the main takeaway is not that one exact rate will arrive on a fixed date, but that mortgage costs are expected to moderate rather than collapse. The forecast also says there is no expectation of a 3% mortgage rate returning in the next five years.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
