How does the 10-year Treasury affect mortgage rates?

This is the large number that you must track. (iStock)

For mortgage borrowers, observing 10-year Treasury rates is more important than most realize. Since mortgage rates often align closely with the yields on 10-year Treasury bonds, keeping an eye on that rate can help borrowers assess when to take out a mortgage or whether it is the right time to refinance.

But there is a lot of mystery surrounding 10-year Treasury rates. Below is a primer on Treasury bills, what you need to know and why it is important to pay attention to these rates. For homeowners who are considering refinancing, now is a great time to visit Credible to see loan options for multiple lenders with less forms to fill out.

How does the 10-year bond affect mortgage rates?

Any company or entity can sell bonds, but Treasury bonds are specifically guaranteed by the government, making them “safer” investment, as they are guaranteed to be refunded. When investors buy bonds, they are basically lending money to the entity – in this case, the government – and in return, investors receive a certain percentage back as “interest” until the bond matures.

Treasury bonds come in different maturity rates, which range from 10 to 30 years. The money is held for that period of time, but as soon as the bond matures, the owner is reimbursed at face value. Meanwhile, investors earn the interest rate set on the investment.

With loan rates below 3%, now is a great time to refinance your mortgage. With Credible, you can find the best refinancing rates and pre-qualify for refinancing in minutes.


This is an important term to be known when it comes to bonds: income.

The yield on US bonds is how much the government will pay for the bonds it sells. When yields are low, it means that demand is high and the government has no problem selling these bonds to investors. When yields are high, it means that demand is low and the government is looking to attract investors with higher interest rates.

The 10-year Treasury bond yield rate is important in addition to the rate of return an investor can expect; it is also often used as a sign of investor sentiment: if investors feel confident enough to invest in the current economy. When demand is high, it usually means that the stock market and the economy are changing and investors want a “low risk” investment vehicle. When demand is low, it means that the outlook and return on other investments, such as stocks and mortgages, are better (and usually because the economic outlook is also a little more optimistic).

In the past 20 years, when mortgage rates have fallen, yields have also fallen. It was the same for this unprecedented year as well. After the outbreak of COVID-19, Treasury bond rates fell to the lowest level ever, thanks to high demand; many investors wanted security for securities during a global health crisis.

If you are ready to refinance, use Credible to search for mortgage companies and compare loan rates without affecting your credit score.

Other factors that affect mortgage rates

Although important, 10-year Treasury yields are only one factor that can affect mortgage rates. Current unemployment rates, inflation rates and current housing conditions influence the tenuous formula that government agencies use to help determine interest rates. With so many factors at stake, it’s easy to see why rates can rise and fall weekly and fluctuate depending on what’s going on in the news, around the world and in the American economy.

For those concerned with losing record low interest rates, visit Credible, where borrowers can explore mortgage refinancing options and compare rates and lenders with ease.