Mortgage rates have been volatile since the start of the Middle East conflict, leaving many borrowers wondering whether to buy, refinance, or wait for lower borrowing costs. A five-year outlook suggests that mortgage rates are unlikely to return to the ultra-low levels seen during the pandemic, and any decline is expected to be gradual rather than dramatic.
The forecast is built around the 10-year U.S. Treasury yield, which often moves in the same direction as 30-year fixed mortgage rates. Mortgage rates are usually higher than Treasury yields because lenders add a spread to cover credit risk, prepayment risk, and market conditions in mortgage-backed securities. In recent years, that spread has often been above 2 percentage points, compared with much tighter levels from 2010 to 2020.
Economic projections cited in the analysis point to Treasury yields easing over time, but not collapsing. Deloitte economist Michael Wolf expects the Federal Reserve to hold rates steady until December 2026, with the policy rate eventually moving toward neutral in 2027. Under that scenario, the 10-year Treasury yield would gradually decline and then stabilize around 3.9% from the third quarter of 2027 through the end of 2030. Other forecasts are somewhat higher. Goldman Sachs sees the 10-year Treasury rising to 4.5% by 2035, while the Congressional Budget Office projects 4.1% by the end of 2026 and about 4.3% by 2030.
Using those Treasury estimates and a projected mortgage spread that gradually normalizes, the base-case outlook points to mortgage rates settling near 6% around 2027 and remaining in that general range through 2030. The analysis suggests that rates could ease from current levels, but not enough to create a major affordability breakout for buyers or homeowners hoping for a dramatic refinancing opportunity.
The report also presents two alternative scenarios. In a bull case, inflation falls back to the Federal Reserve’s 2% target without a recession, rate cuts continue through 2027, and the spread between Treasuries and mortgages narrows. That could bring 30-year fixed mortgage rates down to about 5% by 2030. In a bear case, inflation stays sticky, fiscal deficits widen, and bond market pressure keeps long-term yields elevated. In that environment, mortgage rates could rise toward 7% by 2027 and only ease slightly to around 6.6% by 2030.
The broader message is that mortgage rates remain highly sensitive to inflation, Federal Reserve policy, Treasury yields, and market volatility. A recession, geopolitical shock, or financial disruption could quickly change the outlook. Based on the current forecast, however, mortgage rates are not expected to fall sharply over the next five years, and a return to 3% mortgages is considered unlikely without a major economic shock.
