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How does the 10-year Treasury yield affect mortgage rates? Experts explain
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Mortgage interest rates surged in the post-pandemic era, but borrowers saw some relief recently when rates plunged to a two-year low. However, that relief was fleeting, as a rate increase occurred in October after the September decline.
That said, rates are still projected to fall throughout 2024 — due, in large part, to expectations that the Federal Reserve will lower interest rates again. Still, many would-be homebuyers are uncertain about whether to come off the sidelines and buy or wait to see if mortgage loans continue to become cheaper over time.
To make this choice, it’s helpful to understand how mortgage rates are determined. Since the 10-year Treasury yield plays a role, let’s take a look at how it could affect your borrowing costs.
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What is the 10-year Treasury yield?
To understand how the 10-year treasury yield affects mortgage rates, it’s first important to understand what it is.
The U.S. Treasury Department issues treasury notes, or debt obligations with a maturity date of two, three, five, seven or 10 years. The rates for these treasury notes are fixed at auction and investors receive interest over time. The 10-year treasury yield is the rate 10-year notes offer.
The 10-year treasury yield matters to would-be homebuyers because it has a strong relationship with mortgage rates.
“Typically, when we see the 10-year yield rise, we’d expect mortgage rates to increase,” says Emily Overton, capital markets analyst at Veterans United Home Loans.
This relationship exists because 10-year treasury notes and mortgage-backed securities typically compete for the same investors.
“Investors in the capital markets who buy mortgages need to be incented to purchase these assets,” says Jess Schulman, president of Bluebird Lending. “If the 10-year treasury rate goes up, mortgage rates go up as well, so the investment in mortgages is still an attractive option compared to investing in treasuries. Conversely, if treasury rates go down, mortgage rates will decrease.”
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How does the 10-year Treasury yield affect mortgage rates?
While there’s a strong relationship between the 10-year treasury yield and mortgage rates, that doesn’t mean the two are the same, or even that one directly determines the other.
“The 10-year treasury yield is often viewed as the main benchmark for the direction mortgage rates are headed, but it’s a common misconception that it directly impacts mortgage rates,” says Patricia Maguire-Feltch, managing director of consumer origination sales at Chase Home Lending.
Maguire-Feltch explained there are multiple factors at play in setting home loan rates besides just how treasury yields are trending.
“Mortgage rates are primarily determined by investor demand for mortgage bonds, which are influenced by the market’s expectations for where inflation, economic conditions and interest rate decisions by the Fed are headed,” says Maguire-Feltch.
Maguire-Feltch says mortgage rates and 10-year treasury yields are often conflated because they move in tandem since the same indicators impact demand for both mortgage bonds and treasury notes. Still, while rates on both investments move together, there’s an important difference between them.
“We often see them follow similar patterns,” says Cody Horvat, a licensed real estate broker at Compass explained of treasury bonds and mortgage rates. However, he explained that “mortgage rates are usually a bit higher, due to their increased risk.”
How much higher?
“Over the past five years, the average difference between the 10-year Treasury rate and mortgage rates has been roughly 2.25%,” says Maguire-Feltch.
What will happen to mortgage rates in the final months of the year?
The good news is that trends in 10-year treasury yields and other economic indicators both suggest would-be home-buyers are likely to enjoy relatively favorable borrowing conditions through the final months of 2024 — at least compared to recent years.
“Right now, we’re seeing the 10-year treasury yield bump up from its low point this past September, and mortgage rates are following a similar pattern,” Horvat says. “However, rates are still much lower than we’ve seen them the past two years, so buyers that have been waiting on the sidelines for rates to come down are entering the market at an increased pace.”
There’s also some bad news, though. Rates may not fall much further.
“Barring any unexpected cracks in the employment situation, mortgage rates may hang near their current range through the remainder of the year,” Overton says.
And she isn’t alone in this view.
In fact, Horvat says that while he believes the Fed will continue cuts into 2024, “we probably won’t see any massive block-buster cuts anytime soon, but more slow, steady, and measured reductions as we round out the year,” and Maguire-Feltch says that “given the economy is in a better place than it was earlier this year, we might not see as many cuts to rates and mortgage prices as initially thought. If we see any additional cuts, they are likely to be slow and gradual.”
Overton says that employment numbers are strong enough that there’s some room for the situation to worsen before current rate forecasts would adjust.
“This is important for mortgage rates as we’d need to see higher expectations from the markets for additional cuts for mortgage rates to see more improvement,” she says.
The bottom line
If you’re waiting for a rate drop, you may not be excited at these predictions that rates won’t fall much further for a while. Still, there could be an upside to steady rates, as Horvat warns a big decline could “lead to a hotter than usual housing market after the holiday season wraps up and we enter the new year,” since borrowers who’ve been sitting on the sideline are likely to “flood the market,” and drive up prices.
“Depending on how far rates drop over the coming months, we could see pandemic levels of competition in the housing market as buyers waive inspections and contingencies to get a leg up on other homebuyers,” Horvat says.
If you can afford to buy a home at today’s rates, it may be worth jumping in before this occurs, as refinancing later if rates drop further is a possibility but you can’t get back today’s prices after a cost surge in the housing market.
Living “paycheck to paycheck” is a phrase often used term to describe households that are under financial strain. But what does it really mean, and how many people find themselves depleting their paychecks shortly after earning them?
Bank of America Institute defines living paycheck to paycheck as a households “where necessity spending is more than 95% of their household income, leaving them relatively little left over for ‘nice to have’ discretionary spending or saving.” to be living paycheck to paycheck.
“Many of these spending pressures are likely unavoidable, as they relate to family and housing costs,” Bank of America Institute senior economist David Tinsley told CBS MoneyWatch.
In a Bank of America Institute survey of consumers in the third quarter of 2025, roughly half said they considered themselves to be living paycheck to paycheck.
Bank of America Institute also looked at its own customers’ spending patterns to determine that close to one-quarter of Americans actually live paycheck to paycheck, with most of their monthly income going straight toward essentials.
“The share of households that are living paycheck to paycheck has been rising slightly over the last few years, which is not terribly surprising, because prices have risen for a lot of essential goods — groceries are more expensive, the cost of car insurance is up, and child care is up, too,” Tinsley said.
Higher income, higher housing costs
While lower-income households have a higher share of people who live paycheck to paycheck, some families that are higher up on the income ladder also fall into the same category.
Around 35% of households with incomes below $50K a year are living paycheck to paycheck, up from 32% in 2019, according to internal Bank of America data. Meanwhile, about 20% of households earning $150,000 are living paycheck to paycheck, according to Bank of America Institute’s findings. That’s largely because they have high, fixed housing costs, according to Tinsley.
“People with higher incomes tend to have high-priced homes, and many will have large monthly mortgage payments. So it’s perfectly possible someone with a high income could have a lot of it swallowed up by essentials,” he said.
Hard cycle to break out of
It’s financially straining to live paycheck to paycheck. “It’s usually thought of as a bad thing, that adds stress and is detrimental to a person’s sense of financial well-being,” Tinsley said.
It’s a hard cycle to break out of, too. Housing costs, which are often a household’s greatest expense, can be hard to minimize.
“For most people, they can’t do much about where they live and how much they pay for their home, if they have kids at a school in a particular neighborhood,” Tinsley said. “A lot of these costs are sticky, and there isn’t much to do about it.”
In the longterm, such households end up with little in savings, and are exposed to financial shocks.
“If there were another inflation shock, or a sharper downturn to economy than expected and some people lose jobs, then people living paycheck to paycheck are most immediately pressured to make sharp reductions in spending to balance the books,” Tinsely said. “And that impacts the overall economy.”
Four large asteroids will make their closest approaches to Earth on Thursday, each passing by the planet within a 24-hour time frame.
Two had already zipped past early in the morning, according to NASA’s Jet Propulsion Laboratory. But the remaining celestial objects on track to follow suit were set to make their appearances — albeit not literally, at least from the viewpoints of skywatchers on the ground — later on in the day. Although Thursday’s routes do mark the closest recorded Earth approaches to date for these asteroids, their paths are still quite far away, too distant for any human to spot one of them zooming through space overhead.
NASA scientists flag locations along these objects paths as close approaches when they are slated to arrive at points within 4.6 million miles from the Earth’s surface, which equates to roughly 19.5 times the distance between the moon and the planet, reads a description on the agency’s asteroid watch dashboard. The average distance from the surface of the planet to its satellite is 239,000 miles although the exact length varies at different points in the moon’s orbit.
When an asteroid is larger than about 150 meters, or about 490 feet, across and skims past Earth within this area deemed close range, scientists consider it a “potentially hazardous object.” That’s about the size of a building, and one of the asteroids passing Earth Thursday exceeds that size threshold. The asteroid, named 2002 NV16 after the year it was discovered, measures about 177 meters or 580 feet across — around the same height as a 50-story skyscraper.
The skyscraper-sized rock will travel by the planet from a point 2.8 million miles away, NASA said. A diagram shows its orbit around Earth, the sun and several other planets nearer the sun in the Solar System.
NASA Jet Propulsion Laboratory
NASA tracks close approaches and calculates the odds of those space rocks — including asteroids, meteors and meteorites — impacting Earth.
“The majority of near-Earth objects have orbits that don’t bring them very close to Earth, and therefore pose no risk of impact, but a small fraction of them – called potentially hazardous asteroids – require more attention,” according to the website of the Jet Propulsion Laboratory, which manages the center dedicated to studying near-Earth objects for NASA.
All three of the other large asteroids that have passed or will pass Earth on Thursday are considerably smaller than 2002 NV16. Their sizes range from 23 to 52 meters, or 76 to 176 feet, which NASA classifies as generally similar to the size of an airplane. The most miniature among them makes its closest approach to Earth relative to the rest, at about 1.5 million miles from the surface.
A fifth asteroid will also move past Earth on Thursday, but it’s much smaller. At just 16 feet across, that one is about the size of a typical SUV. Its closest approach will happen 184,000 miles from the planet.
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