Why Experts Say Mortgage Rates Should Ease Over the Next Year

You’ve probably noticed mortgage rates finally starting to dip. The big question is, will it last? And how far could they fall?

Experts say there’s still room for rates to come down over the next year. One of the key indicators to watch is the 10-year Treasury yield. Here’s what that means and why it matters.

The Connection Between Mortgage Rates and the 10-Year Treasury Yield

For more than 50 years, 30-year fixed mortgage rates have moved almost in sync with the 10-year Treasury yield, one of the main benchmarks for long-term interest rates..

When the Treasury yield rises, mortgage rates usually follow. When it drops, mortgage rates tend to come down too.

The gap between the two is called the spread, and it typically averages about 1.76 percentage points (or 176 basis points).

The Spread Is Starting to Shrink

Over the last few years, that spread has been much wider than normal. Why? Because uncertainty in the economy makes lenders cautious, which pushes the gap higher.

But lately, that gap has started to shrink, a sign that confidence is slowly returning to the market.

As Redfin recently explained:

“A lower mortgage spread equals lower mortgage rates. If the spread continues to decline, mortgage rates could fall more than they already have.”

That’s a promising sign heading into 2026.

If you’re wondering whether this could be a good time to make a move, this is a helpful place to start:
Is Now a Good Time to Buy a Home in Palm Beach County, Florida?

The 10-Year Treasury Yield Is Also Expected to Fall

It’s not just the spread tightening. The 10-year Treasury yield itself is forecast to drop over the coming months. When both the yield and the spread move lower, it creates the right conditions for mortgage rates to continue easing.

Here’s a simple way to look at it:

• The 10-year Treasury yield is sitting around 4.09% right now.

• Add the normal spread of 1.76%, and you’d expect a mortgage rate around 5.85%.
  
  

That’s roughly where experts expect rates could land by late 2026, in the high 5s or low 6s.

Of course, there will still be ups and downs along the way. Rates depend on the economy, inflation, and the job market. But the overall direction looks positive.

Bottom Line

Mortgage rates are finally moving in the right direction, and there’s real data to back up why that trend could continue.

Rachel Williams is a real estate agent in Delray Beach and Boca Raton, Florida helping buyers relocate and invest in South Florida real estate.

[email protected] 

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561.900.5477