Mortgage rate predictions for the next five years: What you can expect through 2031

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Mortgage rates continue to rise as 2026 nears its fourth quarter. What is the outlook for home loan rates in the next five years? Should you wait for mortgage rates to fall significantly before buying or refinancing? Mortgage interest rates are determined by several factors , all of which can give us clues about the future. Let's take a closer look at mortgage rate predictions over the next five years.

Mortgage rates are tuned to the government bond market

One of the most useful indicators for predicting mortgage rates is the yield on the 10-year U.S. Treasury note . Mortgage rates and 10-year Treasury yields typically move in the same direction, although mortgage rates are usually higher because lenders factor in additional risks. This difference is known as the spread, and we'll account for it when estimating where mortgage rates could go.

With that in mind, the first step is to look at where economists believe Treasury yields are headed over the next five years. To build a forecast, we'll combine expert economic projections with data compiled using artificial intelligence.

Economists' 5-year forecast for Treasury rates

Michael Wolf, a global economist at Deloitte Touche Tohmatsu Ltd., outlined the firm's Treasury yield expectations over the next five years in a July update from the Deloitte Global Economics Research Center .

"Stronger inflation, coupled with solid payroll growth, will likely cause the Federal Reserve to raise interest rates by the end of this year. However, the rates are unlikely to stay heightened for long. We expect the Fed to announce a rate cut before the end of 2027. We expect oil prices to move lower next year, which will cause inflation to move lower on a sequential basis," he wrote.

Here's the Deloitte 10-year Treasury five-year forecast.

Other forecasts point to somewhat higher long-term yields. For example, Goldman Sachs analysts expect the 10-year Treasury to rise over the long term to 4.5% by 2035.

Meanwhile, the Congressional Budget Office (CBO) projects that the 10-year Treasury yield will reach 4.1% by the end of 2026, rising gradually to about 4.3% by 2030.

Anthropic's Claude artificial intelligence compiled the predictions into a consensus forecast, which we will utilize below.

As mentioned, the 10-year Treasury and 30-year fixed mortgage rates are separated by a spread. That difference between the two has been on either side of 2.5 percentage points in recent years. That's a significant change when compared to the spread from 2010 to 2020, when it was under two percentage points (and often near 1.5).

Using a 2.0 percentage point spread, here's an example of how Treasurys and mortgage rates compare:

Here's a recent example: As of September 9, the 10-year Treasury yield was 4.88%, and the 30-year fixed mortgage rate was 6.76%. The spread was 6.76 - 4.88 = 1.88 percentage points.

Claude AI suggested using a variable spread that slowly declines:

"The spread is stickier than previously assumed. Fannie Mae and Freddie Mac's MBS buyback program, launched January 8, 2026, has prevented the spread from widening further but has not meaningfully narrowed it."

The base case for Claude's spread assumptions now begins at 2.00 percentage points in 2027, gradually declining to 1.90 percentage points in 2031."

Using these spread estimates, we can now complete our five-year mortgage rate forecast.

Using the Treasury forecast, we add the Claude-suggested base case assumed spread between the bond market and 30-year fixed mortgage rates to compile a five-year forecast:

Using the Treasury forecast from above, we add the Claude-suggested base case assumed spread between the bond market and 30-year fixed mortgage rates to compile a five-year forecast:

While this forecast is for a base case with gradual normalization to the spread, the easing of inflation, and modest Fed monetary policy, Claude AI also prepared a "bull" estimate and a "bear" estimate:

The bull case: a soft landing . "The Fed successfully guides inflation back to 2% without a hard recession. FOMC rate cuts resume through 2027–2028, pulling the 10-year yield toward 3.30%. The MBS spread narrows to 1.75 pp by 2031 as the Fed's MBS runoff nears completion, and Fannie/Freddie buybacks continue. The 30-year mortgage rate falls to approximately 5.05% by 2031 — meaningfully lower than today but well above the pre-pandemic era.

The bear case: persistent inflation and fiscal pressure : "Inflation remains above 2.5%, fiscal deficits expand, and foreign holders reduce their Treasury exposure, pushing the 10-year yield above 5%. The spread widens to 2.40 pp as MBS volatility rises and private investors demand more compensation. The 30-year mortgage rate breaches 7% in 2027–2028, easing only marginally to 6.90% by 2031 as conditions stabilize.

Of course, these are long-range estimates based on historical norms and broad expectations. All of these numbers could be thrown out the window if any of the following happens:

The 10-year Treasurys outperform or underperform the forecast. For example, yields could crash in a severe economic setback, such as a recession , or soar on mounting government deficits. We've seen just how unpredictable interest rates can be with wild cards such as geopolitical unrest.

The spread between Treasurys and mortgage rates narrows — or dramatically widens.

Monetary policy, as driven by the Federal Reserve , substantially changes.

Mortgage rate predictions for the next 5 years: FAQs

Will mortgage interest rates ever be 3% again?

There is no forecast that predicts a 3% mortgage rate in the next five years. However, who saw such low home loan rates on the horizon in 2007 when rates were about where they are now? Things like the Great Recession and a global pandemic are rarely on the radar, and such drastic events are what it takes to move mortgage rates into the cellar.

The analysis above predicts 2027 mortgage rates to be near 6.20%.

Will mortgage rates drop in the next 5 years?

Based on the estimates above, mortgage rates are expected to moderate in the next five years. However, a recession or other unknown disruption to the economy (such as war, a financial collapse or another pandemic) could steepen the drop in rates.

Is it better to fix a rate for 2 or 5 years?

If you are considering an adjustable-rate mortgage with an initial fixed-rate period, you will first want to consider how long you will actually remain in the house you are financing. Then the long-term mortgage rate forecasting begins. The best approach is probably to select the initial term that best suits your current budget.

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