There’s a lot to digest about why mortgage rates move. If you watch just one indicator, make it the 10-year U.S. Treasury yield. It’s a widely followed benchmark for long-term borrowing costs, and mortgage rates typically trend in the same direction over time.
What to know now
- Directionally linked: When the 10-year yield rises or falls, mortgage rates often follow.
- The “spread” matters: Mortgage rates don’t equal the 10-year yield; they sit above it by a margin (the mortgage–Treasury spread). That spread has been unusually wide in recent years due to rate volatility, prepayment uncertainty, and shifts in mortgage-backed security (MBS) demand.
- Signs of normalization: As market volatility eases and demand for MBS steadies, the spread has begun to narrow. If that continues—and if the 10-year yield drifts lower in the months ahead—there may be room for mortgage rates to improve. Of course, outcomes depend on inflation, labor data, Federal Reserve policy, and investor appetite.
How you can use this with buyers and sellers
- Set expectations: Explain that rates are driven by both the 10-year yield and the spread. Even if the yield moves sideways, a narrowing spread can help.
- Create a plan, not a prediction: Help clients define affordability ranges and “target rate” thresholds, then act when the market presents an opening.
- Pair strategy with structure:
- Upfront underwriting: Get clients fully underwritten so they can lock quickly when their target rate hits.
- Temporary buydowns and points: Model scenarios (e.g., 1-0, 2-1 buydowns) to balance payment relief and total cost.
- Lock options: Explore extended locks, float-down features, and rate-cap strategies for new construction.
- Refinance readiness: Position today’s purchase with a clear path to refinance if future conditions improve.
- Advise clients to consult directly with their lenders or financial professional to determine available programs and eligibility.
How QRL Financial Services supports you
- Scenario desk: Fast, no-obligation comparisons—buydowns vs. points, ARM vs. fixed, lock vs. float—to help you advise with confidence.
- Co-branded content: Ready-to-send client emails and social posts tailored to your market.
QRL Financial Services is here to help line up your fall pipeline with proactive rate alerts and upfront underwriting. Email us your clients’ target rates and timelines, and we’ll handle the monitoring and strategy.
Source: Macrotrends, 10 Year Treasury Yield Bond Rat Yield Chart, October 2025