Monday, October 6, 2025 / by Maria Ange
Why Experts Say Mortgage Rates Should Ease Over the Next Year
Why Experts Say Mortgage Rates Should Ease Over the Next Year
If you’re keeping an eye on the housing market, you’ve probably noticed that mortgage rates have started to ease slightly. But will this trend continue into next year? According to industry experts, there’s a good chance we’ll see further relief ahead. Let’s break down why.
The Connection Between Mortgage Rates and the 10-Year Treasury Yield
For more than 50 years, the 30-year fixed mortgage rate has closely tracked the movement of the 10-year Treasury yield — a key benchmark for long-term interest rates.
When the Treasury yield rises, mortgage rates typically follow. When it falls, mortgage rates tend to drop as well.
The relationship between these two numbers is known as the spread, which normally averages around 1.76 percentage points (or 176 basis points).
Why the Spread Matters
Over the past few years, that spread has been much wider than usual. Why? Economic uncertainty.
When markets are uncertain, investors demand a larger return for risk — and that widens the spread, keeping mortgage rates higher than expected.
But here’s some good news: that spread is starting to shrink again as the economic outlook becomes clearer.
According to Redfin,
“A lower mortgage spread equals lower mortgage rates. If the spread continues to decline, mortgage rates could fall more than they already have.”
The 10-Year Treasury Yield Is Also Expected to Decline
It’s not just the spread that’s improving — the Treasury yield itself is projected to decline in the months ahead.
Put simply:
A lower Treasury yield + a shrinking spread = a potential drop in mortgage rates.
If these trends continue, experts believe rates could move closer to the upper 5% range by the end of next year.
For example, with the 10-year Treasury yield sitting around 4.09%, adding the average spread of 1.76% gives you a projected mortgage rate near 5.85% — a meaningful improvement from recent highs.
What This Means for Buyers and Sellers
While no one can predict the future with certainty, the overall outlook points toward gradual easing in 2026.
For buyers: Slightly lower rates can boost your affordability and buying power.
For sellers: More buyers entering the market can mean stronger demand for your property.
Bottom Line
Tracking mortgage rate trends can feel overwhelming, especially with the economy and inflation shifting constantly. That’s why it’s so important to have a trusted real estate professional and lender in your corner.
At Coastal Compass Agency, we stay informed on these changes so you don’t have to. If you want real-time updates on mortgage rates — or guidance on how today’s trends could impact your buying or selling plans — reach out anytime.
Contact us today to start planning your next move with confidence.
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