Rather than asking, "When will mortgage rates go down?" many potential home buyers are now worrying that rates could move higher, perhaps beyond 7% — to 8% or more. What if you wait to buy a house only for mortgage rates to turn against you again?

Read more: The best mortgage lenders right now

The Federal Reserve's latest decision on July 30 to delay lowering interest rates pushed the rate cut calendar back again.

While the Fed doesn't control home loan rates, mortgage rates are closely interconnected with the bond market, which needs some kind of motivation to move lower.

However, imagine a scenario where the trade war suddenly goes off the rails. Tariffs upon tariffs cause consumer costs to skyrocket. Combined with rising international tensions, the price of oil soars. The stock market goes into a deep correction.

Now, add rising U.S. debt to the mix. Government spending continues to expand despite the pleas of fiscal conservatives.

"Is the 10-year [Treasury] and longer duration still the safe-haven, flight-to-quality, asset?” Goldman Sachs vice chairman Rob Kaplan said in a recent analysis. “In the last several months, it’s not quite acting that way."

If a sell-off begins, prices slide, and yields soar, the 10-year Treasury yield could jump from the current low-to-mid 4% range to 6% — or higher.

The result? Mortgage rates in the 8% range.

Dig deeper: How are mortgage rates determined? It’s complicated.

Chris Whalen is an investment banker in New York and chairman of Whalen Global Advisors. In an interview with Yahoo Finance in November, he predicted that mortgage rates could increase to 8% in 2025.

These days, his rate prediction is not quite as dire. Yet as the nation continues to wait for the Federal Reserve to cut short-term interest rates, he thinks the growing federal deficit might render a Fed rate cut unlikely to lower mortgage rates.

"When people look at the U.S, they look at the dollar, and they look at some of the other factors — the economy — it's really hard to get them excited about buying that long-dated Treasury paper," he told Yahoo Finance in a phone interview. "So, imagine if [Fed Chairman Jerome] Powell gave Trump what he wants tomorrow, and dropped the fed funds rate half a point. I'm not sure that would help."

Whalen believed a Fed rate cut simply wouldn't be enough to force mortgage rates down significantly. That was the case near the end of 2024, when, after three Fed rate cuts, mortgage rates actually rose.

Keep learning: How the Fed rate decision impacts mortgage rates

Research conducted by the National Association of Home Builders found that with 30-year mortgage rates around 7%, 31.5 million American households could afford a median-priced home of about $460,000. That would require a household income of more than $147,000.

However, as rates climb to 8%, affordability is even further impacted.

Just a quarter-point rate increase from 7.75% to 8% would remove about 850,000 households from the market.

Learn more: How much house can you afford? Use Yahoo Finance’s home affordability calculator.

When was the last time mortgage rates touched 8%? According to Mortgage News Daily data, it was less than two years ago, on Oct. 19, 2023. But for just one day.

However, if a series of events — perhaps a variation of what has been described above — were to become reality, we might see 8% or higher mortgage rates for much longer than one day.

Learn more: Will mortgage rates go up to 7% — and if so, when?

Mortgage loan originator Dan Frio said that, yes, clients still ask when rates will fall back to 3%.

"But we’re starting to see a shift. More people are adjusting their expectations and focusing on what they can afford now rather than waiting for the perfect rate," Frio told Yahoo Finance in an email.

For example, he remembered September 2024 when mortgage rates fell close to 6% and loan activity spiked for both purchase applications and refinancing.

"That shows that buyers are willing to act when the market gives them a window, even in the 6% range," Frio said. "It’s no longer about chasing 3%, it’s about recognizing opportunity when it comes."

He said he helps clients shift their focus from just the interest rate to the bigger financial picture.

"We talk about affordability, monthly payments, and long-term wealth-building through equity," Frio noted. "My advice to buyers today: If the home fits your life and the payment fits your budget, make the move. Rates will always fluctuate, but opportunities — especially in real estate — don’t wait forever."

Read more: Which is more important, your interest rate or house price?

With a fixed-rate mortgage, your monthly principal and interest payment won't change due to rising interest rates. However, if you have an adjustable-rate mortgage and are beyond your introductory rate period, your payment is likely to move higher according to the terms of your loan.

Many people do, often thinking they may have the opportunity to refinance their mortgage later. However, deciding to buy a house is based on several factors beyond interest rates. Affordability is determined by the price of the home you want to purchase, the down payment you have saved, and the debt you currently carry. In addition, you'll want to consider the number of years you want to remain in the city and the house you are considering. That can be related to employment, children, and other personal considerations.

The highest mortgage rate recorded by Freddie Mac was 18.63% in October 1981, and that was with more than two discount points applied. The 54-year average for a 30-year fixed mortgage is about 7.75%. From a historical point of view, a high mortgage rate would be somewhere between the two. From a practical standpoint, and for prospective home buyers, a high mortgage rate is likely any interest rate that makes their monthly loan payment unaffordable.

Laura Grace Tarpley edited this article.

Mortgage rates are stuck in a rut, and expectations for a little monetary assistance are pushed back to mere days before the official start of fall. At its July 30 meeting, the Federal Reserve once again left short-term interest rates unchanged. Wall Street isn't expecting a rate cut until September at the earliest. That means mortgage rates won't make any big moves downward anytime soon. Until market forces influence interest rates to fall, you'll need to work the system to get the lowest mortgage rate you qualify for. Here's how.

Learn more: How the Fed rate decision impacts mortgage rates

Analysis by Yahoo Finance of nearly 5,000 mortgage lenders reporting 2024 loan information under the Home Mortgage Disclosure Act reveals the surprising truth: the lenders offering the lowest mortgage rates.

Unfortunately, the results won't help the typical borrower.

By and large, the mortgage lenders who offered astonishing, rock-bottom mortgage rates made a tiny number of loans — no doubt allowing drastic rate concessions to a small slice of preferred customers. We're talking median interest rates from 2.4% to 4.75%, which are made by lenders underwriting loans to as few as a handful of customers.

Other lenders offering the absolute lowest mortgage rates in 2024 were banks catering to select clientele, credit unions serving local members, and homebuilders financing their own construction.

So, what if you aren't buying new construction from a lender offering a buydown, a member of a credit union willing to offer below-market-rate loans, or an affluent investor with a million-dollar portfolio?

Here are eight strategies to get the lowest mortgage rates with the cheapest home loan you can qualify for — all while using a regular, more well-known mortgage lender.

You may already know that mortgage rates vary by credit score. Whenever you boost your credit score from a lower to a higher tier, you save money.

For example, the entry-level FICO Score of 620 might earn you an annual percentage rate, or APR, of 7.896% (based on mortgage rates as of July 16, 2025, with the purchase of one discount point). Raise your score to the next credit band of 640 to 659, and your interest rate could improve to 7.145%.

Bigger rate discounts are offered as you climb the credit score ladder. Here are the interest rate breaks as shown by MyFico.com's Loan Savings Calculator:

Read more: What credit score do you need to buy a house?

The amount of recurring monthly debt you carry when applying for a mortgage is another significant factor in the interest rate you'll earn. The more debt, the higher your mortgage rate.

To get the lowest mortgage rate, aim for a DTI of 25% or less. To calculate your debt-to-income ratio, divide your total monthly debt by your monthly income before withholdings. For example, say you need $700 for monthly rent, $300 for a vehicle loan, and $100 in student loan payments. That's $1,100. With a monthly gross income of $5,000, your DTI is 22%.

1100 / 5000 = 0.22

You're in the pocket for a lower mortgage rate. Mortgage lenders may consider DTIs up to 50%, but prefer 35% or less — and the lowest mortgage rates go to borrowers with DTIs of 25% or less.

Another best practice for getting the lowest mortgage rate is to make as much of a down payment as you comfortably can. While you can get a home loan with as little as 3% down, paying more upfront will earn you a lower mortgage rate.

For first-time home buyers, the median down payment was 9% in 2024, according to the National Association of Realtors.

Prepaying interest to lower your ongoing mortgage rate, called buying discount points, gains popularity in times of higher interest rates.

Buying one point equals 1% of the loan amount and will generally reduce your interest rate by one-quarter of a percentage point. Any number of points can be purchased and applied in fractional amounts too.

However, it's a good idea to calculate the up-front cost of buying points and compare that with the discount you receive on your long-term interest rate. Other factors to consider in this calculation include how long you expect to live in the home and your down payment.

Lenders sometimes add a point or two to a mortgage proposal to make their offered interest rate appear more enticing. But remember, you're actually paying for the discount with an up-front fee.

When shopping for a loan, compare loan offers with zero points. Then, you can decide how many points to buy, if any, to lower your interest rate.

Here's a surprising fact: In a Zillow survey of home buyers over seven months of 2024, about 45% obtained a mortgage rate below 5% — when rates were above 6.5%, like they are now.

How? One-third were successful in negotiating special financing with the home seller or builder. More than one-quarter got a rate buydown from the seller or builder (see below). Nearly a quarter (23%) bought discount points, as we've just mentioned.

If mortgage rates are near 6% and you want to get below 5%, you'll need to buy four to five discount points. (Remember, each point you buy reduces your interest rate by approximately a quarter of a point.)

For example, one point on a $300,000 mortgage would equal $3,000. If you want to purchase five points, you'll likely pay $15,000. You will want to discuss your point-buying strategy with your lender to ensure it gets your long-term loan rate to your target.

Borrowers can lower their mortgage interest rate for the first few years of the loan term with a buydown. Home builders, sellers, and some lenders sometimes offer an interest rate buydown to boost sales. However, it is a rare option among mortgage lenders.

For national mortgage lenders with buydown programs, check out Guild Mortgage and AmeriHome Mortgage.

For example, a buydown might lower your interest rate from 7% to 6.5% for two years. It can be a good deal if the company offering the buydown isn't making it up with fees somewhere else.

While you get a short-term break on the interest rate, your payments and total interest may actually be higher over the long term. Buying down your interest rate is a strategy that requires running the numbers on the long-term benefits.

If you're interested in a buydown, compare a mortgage both with and without a buydown. Lenders will qualify you based on the permanent interest rate, not the temporary buydown rate. Finally, be prepared for your monthly payment to rise at the end of the buydown’s discount period.

A mortgage product that increases in popularity whenever rates begin to rise is back: the adjustable-rate mortgage.

ARMs have a fixed interest rate for an introductory period, often three to 10 years, and then the rate changes regularly, usually once or twice a year. Tips when shopping for an ARM:

Look for an introductory rate that is lower than a fixed-rate mortgage.

Choose a term you feel comfortable with, perhaps in line with how long you plan to stay in the home.

Make sure you budget for possible increases in your monthly payment if the interest rate moves higher after the end of the introductory fixed-rate period.

In the past, it was common to find ARMs with introductory rates well below the prevailing long-term fixed interest rate. An ARM could be a good idea today, but the intro rate isn't always lower anymore. You'll have to shop diligently — and bravely negotiate.

Dig deeper: Adjustable-rate vs. fixed-rate mortgage — Which should you choose?

Are you looking for an interest rate that never changes and allows you to build home equity faster? Consider a shorter-term loan. Mortgages with 20- or 15-year fixed terms, as opposed to the traditional 30-year term, typically come with lower interest rates.

However, since the term is shorter, monthly payments tend to be higher.

Keep learning: 15-year vs. 30-year mortgage — How to decide which is better

An assumable mortgage allows you to take over the remaining payments of an existing home loan. You would likely make a lump sum payment to the current owner to cover the value of any equity or for a profit. That would require you to have the needed cash on hand or perhaps get a loan.

As tempting as it might be to pick up a low-interest-rate assumable loan, most conventional mortgages aren't eligible. That means you would need to find a seller with an FHA, VA, or USDA loan.

Read more: Mortgage rate predictions for the next five years

Since mortgage rates are constantly changing, and each lender's rate varies, the lowest mortgage rate you can earn requires some research. You will want to know your credit score, debt-to-income ratio, and the amount of your down payment.

With that information, you can begin contacting lenders. Knowing generally where you want to buy a house and how much it will cost, you can gather rate estimates based on your creditworthiness.

Once you have two or three contenders, you can apply for preapproval with each and get a more exact mortgage rate.

Learn more: 6 tips for choosing the right mortgage lender

Current home loan interest rates are well above 6%. Many (72.1%) of existing homeowners have a mortgage rate below 5%, and over half (54.1%) have a rate below 4%, according to Realtor.com. So, refinancing is not an option for many homeowners right now.

However, owning a home is a long-term commitment, and mortgage rates are very cyclical. Just because mortgage rates are above historic lows doesn't mean a refinancing opportunity will not present itself some years down the road.

After you move in, keep an eye on interest rates. Look for a dip of about 1% to 2% below your current mortgage rate before refinancing. Just remember — there will be refinance closing costs, and you need to decide if your goal is to lower your monthly payment or to pay off your home sooner.

Dig deeper: 6 times when it makes sense to refinance your mortgage loan

The lowest mortgage rate ever on a 30-year loan was 2.65% in January 2021, according to Freddie Mac. It takes dramatic and systemic financial stress to shock mortgage rates to such a low level. COVID-19 was just that. Some 15 months later, mortgage rates were up to 5%.

Never say never — but it's unlikely that mortgage rates will go back down to 3%. A drastic event (like the COVID-19 pandemic) would have to occur again for rates to drop this low.

VA loans, especially 15-year VA loans, usually have the lowest mortgage rates because shorter terms have lower rates than longer terms.

Laura Grace Tarpley edited this article.

Home buyers and potential loan refinancers have been pinning their hopes on a return to mortgage rates in the 3% range. However, with home loan rates remaining close to 7% for nearly three years, perhaps 5% is becoming a more reasonable possibility for 30-year fixed mortgages.

Most housing experts aren't expecting rates to move much lower through the end of this year. However, a major economic setback could trigger much lower mortgage rates.

So, expect rates to be mostly unchanged. But prepare for 5% mortgage rates.

Learn more: How to buy a house in 13 steps

What would trigger lower mortgage rates? Realtor.com chief economist Danielle Hale said it's a matter of time.

"The most likely catalyst is time. As time goes by, as you get closer to that 2% inflation anchor that the Fed is targeting, it would normalize the (Federal Funds rate) and it would normalize longer-term interest rates," Hale told Yahoo Finance. "The federal rate would probably get back into the 2-1/2% range or so, which is probably enough to bring long-term yields back around 4%, and that would probably put mortgage rates in the 5-1/2 to 6% range."

She noted that Federal Reserve rate cuts and lower mortgage rates are not a one-for-one proposition. Hale said that from last September through January, the Fed cut its benchmark rate by a percentage point, and mortgage rates rose by almost the same amount.

The Federal Reserve has delayed rate cuts this year. With no Fed meeting scheduled in August, Wall Street has high expectations for a quarter-point interest rate cut in September.

Learn more: How the Fed rate decision impacts mortgage rates

"You could get [to 5% mortgage rates] faster if you were to have a recession," Hale added. "That could cause the Fed to cut rates, and you could see 5 1/2% — maybe even slightly below 5 1/2%, in a really bad recession."

Even though the latest GDP report indicated that the U.S. is not in a recession, the most recent employment data is fanning the flames of recession fears.

Realtor.com research conducted in the first quarter of 2025 found that roughly three in 10 (29.8%) of potential home buyers surveyed said a recession would make them at least "somewhat more likely" to buy a home.

"It seems that some shoppers are anticipating either lower mortgage rates or lower home prices, or both, in a recession to potentially create some sort of opportunity for them to buy," Hale said.

Of course, a recession could bring many complications into the affordability equation: job and income insecurity among the most likely.

Dive deeper: Do mortgage rates decrease in a recession?

If mortgage rates fall into the 5% range, Hale believes it would bring buyers and sellers back into the market. But would a resurging market introduce more competition for buyers?

Hale said that while home buyers are looking for lower mortgage rates, home sellers are too. Listings may increase as sellers see an opportunity to move into their next house at a reasonable interest rate.

"When rates drop, normally that would increase competitiveness in the market because it creates opportunities for home buyers. But I think, interestingly, this will also create some opportunities for home sellers, so we might not see competitiveness pick up quite as much."

Read more: You locked in a low mortgage rate — now you want to move. What should you do?

The window for lower mortgage rates may open quickly — and perhaps close just as fast. As a borrower and home buyer, you'll want to be prepared.

Have your down payment in the bank. When an opportunity to buy presents itself, you'll have the funds ready to take action. Have enough for closing costs too.

Check your credit score and get your personal finances in shape.

Nail down your home price range and target monthly payment. Knowing how much house you can afford and narrowing down the appropriate neighborhoods can set you up for early success when the time is right.

Explore a prequalification. Talk to a few mortgage lenders and have your home loan options lined up. You can have the lenders in your pocket for when it's time for an official loan preapproval.

Learn more: Mortgage rate projections for the next five years

It's not a common prediction among industry observers, but one expert believes so. Chris Whalen, an investment banker in New York, told Yahoo Finance in a phone interview that 5% is likely the next move for mortgage rates. "If you really wanted to put me on the spot [and ask me] 'how low do you think mortgage rates will go in the next cycle?' I'd say 5%."

It’s unlikely that mortgage rates will fall to 4% anytime soon. Unusually low mortgage rates only became possible following the 2008 housing crisis and the ensuing recession. Then, the COVID pandemic tamped them down even further. It was a rare set of circumstances that pushed mortgage rates to historic lows. It would likely take equally unusual events to cause such low rates to happen again.

The average 30-year mortgage interest rate dipped into the lower 5% range for about six weeks in the summer of 2003. Then again briefly in March 2004. A longer stretch of mortgage rates near and well below 5% began during the housing crisis and recession of 2008 and lasted 14 years, ending in October 2022.

Probably not, on the Fed's current schedule. It would likely take an economic reversal, spurring further federal funds rate cuts, to get mortgage loan rates close to 5%.

Buy a home when you can afford to. A mortgage rate is not a lifetime commitment. It's likely you'll own more than one house, and even if you buy at a higher rate now, you can always refinance when rates come down.

Mortgage rates are far lower than the historically high levels in the 1980s. Home buyers have seen better days, though, with current rates significantly higher than their sub-3% lows from 2021. There’s no crystal ball to show how rates will move in the coming months or years. Still, understanding historical mortgage rate trends can help you make a more informed home-buying decision — and maybe lift a weight off your shoulders when you realize that, historically speaking, today’s interest rates aren’t as high as you might think.

Read more: The best mortgage lenders for first-time home buyers

In this article:

History of home interest rates

Historical mortgage rate trends

1970s

1980s

1990s

Mortgage rates in the 2000s

2000s

2010s

2020s

Factors that impact mortgage rates

Mortgage rates and the housing market

Mortgage rates and refinancing

The bottom line: How current mortgage rates compare to historical ones

FAQs

Congress established Freddie Mac in 1970 to expand the secondary mortgage market. Freddie Mac began tracking rates in April 1971.

The average annual rate on a 30-year fixed-rate mortgage reached its highest point at 16.64% in 1981 and dropped to a historic low of 2.96% in 2021. At the time of publication, the average rate sits in the mid-6% range.

Here’s a closer look at home interest rates over time.

Read more: When will mortgage rates go back down to 6%?

Lowest annual average mortgage rate: 7.38%

Highest annual average mortgage rate: 11.20%

Mortgage interest rates rose steadily from the mid-7% range to roughly 9% in the 1970s. Buyers saw a significant jump to over 11% by the decade's end.

The Great Inflation caused the incline, a period marked by record-high inflation. It spanned from the mid-1960s to the early 1980s and was triggered by the Fed’s monetary expansionary policies implemented during this period.

Dig deeper: Will mortgage rates go back up to 7%?

Lowest annual average mortgage rate: 10.19%

Highest annual average mortgage rate: 16.64%

The upward trend continued into the 1980s, and average mortgage rates reached an all-time high of 16.64% in 1981. The Organization of the Petroleum Exporting Countries (OPEC) issued an oil embargo against the U.S. in the 1970s, and in response, the Fed slashed and increased short-term rates many times throughout the 80s.

By the mid-1980s, the average rate started to drop and closed out at 10.32%

Lowest annual average mortgage rate: 6.94%

Highest annual average mortgage rate: 10.13%

Home buyers got a bit of relief in the 1990s. Mortgage rates cooled to just below 7% in 1998, then rose slightly to an average of 7.44% in 1999. Borrowers could thank the dot-com bubble and the rise of the internet for the drop in rates.

More specifically, investors moved away from tech stocks and toward bonds and other fixed-income investments, pushing mortgage rates down.

Lowest annual average mortgage rate: 5.04%

Highest annual average mortgage rate: 8.05%

Mortgage rates peaked at 8.05% in the early 2000s before dropping to 5.04% by 2009. The culprits were the economic crash and the subsequent Great Recession. Both stemmed from astronomical growth in the housing market, mainly due to the influx of subprime borrowers.

The mortgage payments became too much for these borrowers to handle. Many found themselves underwater on their mortgage loans, and the housing market eventually crashed.

A wave of foreclosures followed, prompting the Fed to cut rates and stabilize the market. This is the perfect example of the general rule that mortgage rates decrease when the economy struggles.

Learn more: When will the housing market crash again?

Lowest annual average mortgage rate: 3.65%

Highest annual average mortgage rate: 4.69%

Mortgage rates remained low this decade. They temporarily reversed course in 2014 and again in 2018, with average rates at 4.17% and 4.54%, respectively — still four times lower than the all-time high. The decade ended with an average slightly below 4%.

Dig deeper: Will mortgage rates drop back down to 4%?

Lowest annual average mortgage rate: 2.96%

Highest annual average mortgage rate: 6.81%

The COVID-19 pandemic ushered in record-low rates, largely due to the Federal Reserve cutting the federal funds rate to make borrowing attractive again. Unfortunately, these enticing rates were short-lived, as the Fed followed up its actions with several rate hikes between March 2022 and July 2023.

Rate hikes made home loans more expensive. The average spiked to 5.54% in 2022, followed by another increase to 6.81% in 2023. A rate cut in September 2024 caused the rate to dip to 6.72% that year.

Despite these changes in recent years, rates haven’t returned to their pre-pandemic levels and are among the highest since 2002. It would take a drastic event (along the lines of the COVID-19 pandemic) to cause home loan rates to plummet back to the 3% range.

Keep reading: What happens if mortgage rates go up to 8%?

Mortgage rates can fluctuate daily. Multiple factors affect mortgage interest rates, and here are some of the most common:

Federal funds rate: Mortgage rates typically increase when the Fed rate increases and decrease when the Fed rate decreases.

10-year Treasury yield: Because mortgages are longer-term loans, their rates follow the 10-year Treasury yield’s movements even more than shorter-term yields (like the fed funds rate).

Inflation: You’ll usually see mortgage rates increase when inflation rises more aggressively than economists expect.

Global events: Investors’ perceptions of events like the U.S. presidential election or tariffs imposed on other countries can impact home loan rates either way.

Economic conditions: Mortgage interest rates tend to increase when the economy thrives and decrease when the economy struggles.

Job market: Since the job market is part of the overall economy, rates tend to increase when the job market is doing well.

Home-buyer demand: The more demand in the housing market, the higher the rates.

These are factors you can't control. However, a mortgage lender may give you a better interest rate if your personal finances are strong.

A mortgage lender’s advertised rate may not be the one you receive. It depends on several personal factors, including your credit score, down payment, debt-to-income (DTI) ratio, and cash reserves (if applicable).

The type of mortgage loan you get also plays a role in the mortgage rate you’re offered. For example, VA loans often have lower interest rates than conventional loans.

When rates are low, homeownership becomes more attractive, driving up demand. Home prices also follow suit as more prospective buyers hit the market.

Still, lower borrowing costs mean access to more buyer power and lower monthly mortgage payments. Keep in mind that the lowest mortgage rates are generally reserved for well-qualified borrowers with strong credit scores.

Keep reading: When will mortgage rates go down? A look at 2025 rate predictions.

Refinancing a mortgage makes sense when rates drop, but only if you qualify for a better deal. It isn’t a hard-and-fast rule, but many say you should consider refinancing if you can secure a rate reduction of at least 1%.

If you plan to move soon, though, the costs of refinancing could outweigh the long-term benefits.

Mortgage rates fluctuate with economic conditions, and there’s no surefire way to time the market or predict when rates will shift. Ideally, you want to purchase when rates are low to keep borrowing costs in check. However, buying a home is not necessarily a bad idea when rates are higher if your finances are in solid shape.

Current rates haven’t returned to the pre-pandemic levels. Still, they remain well below the record highs in the late 1970s, 1980s, and 1990s. And if you decide to buy a home before rates drop, refinancing into a lower rate later is always an option — provided your finances are up to par.

Learn more: 6 times when it makes sense to refinance your mortgage

Inflation and Fed rate hikes in recent years have kept mortgage rates elevated. However, even though mortgage rates may seem very high, they’re low compared to the rates of the 1970s, 1980s, and 1990s.

As of August 2025, the average mortgage rate on a 30-year fixed-rate loan is in the mid-6% range. Any rate around or below this number could be considered “good.”

According to Freddie Mac, the lowest average weekly rate on a 30-year fixed mortgage was 2.65% in 2021 due to a Fed rate cut prompted by the COVID-19 pandemic. The cut was made to address economic uncertainty and persuade consumers to increase spending and borrowing levels, aiming to stimulate the economy.

Laura Grace Tarpley edited this article.

How long will mortgage rates remain in the mid- to upper-6% range? Mortgage interest rates are determined by many factors, a major one being the 10-year Treasury yield. At Yahoo Finance, we’ve designed a five-year mortgage rate forecast, built on a 10-year yield correlation, that provides some insight.

Read more: The best mortgage lenders right now

Mortgage rate forecasts might best be derived from 10-year Treasury note trends. While the two rates often track in the same direction, there is a spread between them that we will account for below.

First, let's understand where Treasury yields are headed in the next five years. We'll combine human analysis with data pulled from artificial intelligence to put together a prediction.

Michael Wolf is a global economist at Deloitte Touche Tohmatsu Ltd. In June, the Deloitte Global Economics Research Center issued an updated U.S. economic forecast in which Wolf laid out the firm's Treasury yield expectations over the next five years.

"We expect the 10-year Treasury yield to hover near 4.5% for the remainder of this year, despite a softening in economic data and a 50-basis-point cut from the Fed in the fourth quarter of 2025," he wrote. "The 10-year Treasury yield begins to decline slowly in 2026, falling to 4.1% by 2027 and remaining there through the end of 2029."

Let's chart that forecast.

That's not much movement. Goldman Sachs analysts agree, saying the 10-year Treasury will remain near 4.1% through 2027.

Meanwhile, the Congressional Budget Office (CBO) forecasts the Treasury yield to be 4.1% by the end of 2025, down to 4% in 2026 and remaining near 3.9% through 2029.

Dig deeper: When will mortgage rates go down?

As we mentioned up top, 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 2.5 percentage point spread, here's an example of how Treasurys and mortgage rates compare:

10-year Treasury rate = 4%

Spread = 2.5 percentage points

Mortgage rates = 6.5%

Here's a recent example: On Aug. 14, 2025, the 10-year Treasury yield was 4.23%, and the 30-year fixed mortgage rate was 6.63%. The spread was 6.58 - 4.29 = 2.29 percentage points.

The latest version of artificial intelligence, GPT-5, suggested using a spread of 2.1 to 2.3 percentage points. Here is its rationale:

Historical standard (2010s): ~1.7 pp

Recent years (2022 to 2025): ~2.6 pp

Estimated 5-year average spread: ~2.1 to 2.3 percentage points

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

Read more: How to get the lowest mortgage rate possible

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

Learn more: When will mortgage rates go back down to 6%?

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:

10-year Treasurys outperform or underperform the forecast. For example, yields could crash in a severe economic setback, such as a recession.

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

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

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 black swan events are what it takes to move mortgage rates into the cellar.

The analysis above predicts 2027 mortgage rates to be around 6.2% to 6.4%.

Based on the estimates above, rates are not expected to drastically drop in the next five years. However, a recession or other unknown disruption to the economy (such as a financial collapse or pandemic) could change the outlook.

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

Laura Grace Tarpley edited this article.