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The 10 Year Treasury and Your Mortgage Rate

When you're shopping for a mortgage, you might hear people talk about the 10-year Treasury yield — even though you're not buying government bonds. So, what’s the connection?

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The 10-year Treasury is a type of loan the U.S. government takes out by selling bonds to investors. The yield is the interest rate the government pays to borrow that money for 10 years. It’s considered one of the safest investments out there, so it’s often used as a benchmark for other interest rates — especially mortgage rates.

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Why it matters for your mortgage:

Most 30-year fixed-rate mortgages don’t last the full 30 years — people refinance, move, or sell their homes sooner, often in about 7–10 years. That’s why mortgage lenders pay close attention to the 10-year Treasury.

Here's the relationship:

When the 10-year Treasury yield goes up, mortgage rates usually go up too.
When the yield goes down, mortgage rates usually go down.

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Why do they move together?

Banks and lenders want to make a profit and minimize risk. If they can lend to the government at a safe return (like 4% on the 10-year Treasury), they’ll only offer mortgage rates that are higher than that — to account for the higher risk of lending to people (compared to the U.S. government).

So if Treasury yields rise, lenders raise mortgage rates to stay competitive. If yields fall, lenders lower rates too.

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Real-Life Example:

Let’s say:

  • The 10-year Treasury yield is 3.5%.

  • That same day, the average 30-year mortgage rate might be around 5.5% or 6%.

If the Treasury yield jumps to 4%, mortgage rates might rise to 6.5% or higher.

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The Takeaway:

As a first-time homebuyer, you don’t need to watch Wall Street daily, but knowing that mortgage rates are influenced by the 10-year Treasury helps you understand why rates change — and why timing matters when locking in your mortgage.

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​Want tips on how to watch rates or when to lock in a rate? We can help with that too.

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Timing your mortgage rate lock can potentially save you thousands of dollars over the life of your loan. Here’s how to monitor rates and know when to lock one in:

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How to watch mortgage rates:

 

1. Follow the 10-Year Treasury Yield

  • Remember, mortgage rates tend to follow the 10-year Treasury yield.

  • You can check this daily on financial websites like:

  • Look for trends (upward or downward) over several days, not just one-day changes.

2. Use Mortgage Rate Trackers

  • Websites like:

  • You can set alerts on some of these to notify you when rates hit a certain level.

3. Talk to Your Lender Regularly

  • Your lender or mortgage broker can give you updates on rate movement and help you spot a good time to lock in.

  • Some offer a “float-down” option — more on that below.

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When should you lock in a mortgage rate?

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Lock in When:

  • You’re under contract on a home and getting close to closing (usually within 30-60 days).

  • Rates are trending upward, and you’re happy with the current offer.

  • You can’t afford the risk of rates rising (tight budget).

Wait or "Float" When:

  • Rates are steady or dropping.

  • You have time before closing (60+ days) and can watch the market.

  • Your lender offers a float-down option, meaning: If rates drop after you lock, they'll let you take the lower one - but not all lenders offer this. 

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​Pro Tips:

1. Know the Lock Period

  • Rate locks typically last 30, 45, or 60 days. The longer the lock, the higher the rate might be (to account for the risk).

2. Watch Fed Announcements

  • The Federal Reserve doesn’t set mortgage rates, but when they raise or lower the federal funds rate, it can influence bond yields and thus mortgage rates.

3. Use a Mortgage Calculator

  • Run the numbers at different interest rates. For example:

    • At 6% vs. 6.5% on a $300,000 loan, you’d pay $95 more per month — over $34,000 more in interest over 30 years.

4. Don’t Try to Time the Bottom Perfectly

  • Mortgage rates fluctuate daily and are hard to predict. If a rate works for your budget and goals, it’s okay to lock in even if it might go slightly lower.

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