If you’ve been waiting for mortgage rates to come down before buying your next home, the good news is: they’re starting to. The big question now is — will this downward trend continue, and how low can rates really go?
Experts say there’s still room for rates to fall further over the next year. And to understand why, it helps to look at one of the most reliable indicators in real estate finance: the 10-year Treasury yield.
How the 10-Year Treasury Yield Impacts Mortgage Rates
For more than five decades, 30-year fixed mortgage rates have closely followed the 10-year Treasury yield — a key benchmark for long-term interest rates. Historically, when the yield rises, mortgage rates follow; when it falls, rates tend to dip as well.
This pattern is so consistent that experts use something called the “spread” to measure it. Typically, the spread averages around 1.76 percentage points. But in the past few years, economic uncertainty widened that gap — and that’s one major reason mortgage rates stayed unusually high.
The Spread Is Narrowing — And That’s Good News
Recently, that spread has started to shrink again. As economic conditions stabilize, investor confidence is slowly returning. And as the spread narrows, mortgage rates have more room to fall.
A recent report from Redfin highlights this perfectly:
“A lower mortgage spread equals lower mortgage rates. If the spread continues to decline, mortgage rates could fall more than they already have.”
This shift could bring real opportunities for homebuyers in markets across Tacoma, Puyallup, Auburn, Sumner, SeaTac, Des Moines, Burien, Normandy Park, Lake Tapps, and Bonney Lake, where affordability and timing often play a major role in moving forward with a purchase.
The 10-Year Treasury Yield Is Expected To Decline
In addition to the shrinking spread, forecasts also show the 10-year Treasury yield itself trending downward. With both forces working together — a lower yield and a narrower spread — experts believe mortgage rates could ease further into 2026, possibly dipping into the upper 5% range by late next year.
For example, if the 10-year yield sits at around 4.09% and you add the average spread of 1.76%, you’d expect mortgage rates to hover near 5.85%.
Of course, factors like inflation, job growth, and broader economic trends will continue to influence these numbers. But overall, the outlook points toward gradual improvement.
The Bottom Line
Mortgage rates may not return to pandemic-era lows, but they’re steadily heading in a more favorable direction for buyers. If you’re planning to purchase a home in Tacoma, Puyallup, Auburn, Sumner, SeaTac, Des Moines, Burien, Normandy Park, Lake Tapps, or Bonney Lake, the next few months could open up opportunities you’ve been waiting for.
For deeper insights and guidance on your next move, explore more local real estate market updates to stay ahead of the trends.
