The Federal Reserve has made it official: Interest rate moves are on hold. Following its January 28 meeting, the Fed announced it was still assessing the economic outlook and declined to cut the federal funds rate. So, where are rates headed in the next five years, and should you wait for mortgage rates in particular to decrease before buying or refinancing?Mortgage interest rates are determined by several factors, all of which can give us clues about the future.

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Mortgage rate forecasts may be best derived from trends in 10-year Treasury note rates. 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 examine where Treasury yields are likely to head over 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 September, 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.

"Although we anticipate short-term interest rates to decline in the next couple of years, long-term interest rates are expected to remain elevated," he wrote. "Notably, we expect the 10-year Treasury yield to remain above 4.1% through 2030."

Let’s chart that forecast.

That’s not much movement. 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) forecasts the Treasury yield to be 3.9% by the end of 2026, then drop to 3.8% by 2030.

Since the Deloitte forecast falls somewhat between the Goldman and CBO predictions, we’ll use it as our baseline.

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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: As of January 22, the 10-year Treasury yield was 4.26%, and the 30-year fixed mortgage rate was 6.09%. The spread was 6.09 - 4.26 = 1.83 percentage points. The spread is under two percentage points this week, which is one reason mortgage rates have decreased.

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.

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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:

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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. 1.

The spread between Treasurys and mortgage rates narrows — or dramatically expands. 1.

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

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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 around 6.28% to 6.48%.

Based on the estimates above, mortgage rates are not expected to drop significantly 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 approach is probably to select the initial term that best suits your current budget.

Laura Grace Tarpley* edited this article.*