US Treasury Department.

10-Year Treasury And Mortgage Rates: Understanding Their Relationship

Scott Steinberg3-minute read

November 22, 2022


It may interest you to note that the relationship between 10-Year Treasury notes and mortgage rates is surprisingly intertwined. While it’s true that many factors can impact the growth or decline of interest rates (like government policy, economic reality, etc.), knowing how 10-year Treasury yields affect the rise or fall of mortgage rates can prove helpful. That’s because as yield curves change on 10-Year Treasury bonds and notes, they can also influence mortgage rates (and monthly mortgage payments) in turn.

Simply read on to find out more on mortgage rates and Treasury yields − including how bond yields might impact your real estate budget and financial planning strategies in the months ahead.

What Is A 10-Year Treasury Bond?

Bonds with a 10-year maturity are a form of debt issued by the U.S. government, which leverages revenues generated by the sale of these instruments to fund its activities.

In the case of a 10-year Treasury bond, the debt obligation matures a decade after the first issuance of the Treasury note, which pays holders a fixed amount of interest every six months − and pays out to the tune of its face value on maturity.

The 10-year Treasury note has the longest length of term to maturity of all Treasury notes and is one of the most widely watched and tracked instruments of government debt that is issued in the world of finance today. Bearing this in mind, it’s often used as a baseline or bellwether around which other interest rates such as home mortgage rates are benchmarked.

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How Does The 10-Year Treasury Affect Mortgage Rates?

Shifting yields on 10-year Treasury notes can clearly impact current mortgage rates − and the higher that 10-year Treasury yields go, the higher that you can expect that mortgage rates will be.

Think of it this way: Investors are constantly looking for the best rate of return on their investments, and generally seek safe and steady returns on their money. As a result, they frequently compare how much that they stand to make on different fixed-income products such as money market funds, certificates of deposit (CDs), mortgage-backed securities, corporate bonds, and Treasury notes. Treasury notes, which are backed by the U.S. government, are among the safest and most secure bond investment options for these investors.

By comparison, mortgage-backed securities (which are based on the value of respective home loans) potentially offer higher returns in exchange for more risk on the part of investors. Noting this, when Treasury yields rise, investors demand higher rates of return on mortgage-backed securities to offset the greatest risk that they’re taking − and that leads to higher interest rate payments for potential home buyers.

Other Factors That Can Affect Mortgage Rates

Of course, a variety of different factors and variables can also impact mortgage rates in America as well − not just 10-year Treasury notes. Some are within the U.S. government’s ability to control, while others may be tied to larger macroeconomic developments or emerging events and market conditions. Examples include:

  • Unemployment rate
  • Inflation rate
  • Housing conditions
  • Market conditions
  • Geopolitical concerns
  • Government policy

How Do Mortgage Rates And Treasury Yields Work?

U.S. Treasury notes, bonds, and bills can all have an impact on fixed-rate mortgages. For example: Treasury yields impact conventional fixed-rate 15- and 30-year loans − and the higher that 10-year Treasury rates go, the higher that home mortgage rates will climb. Conversely, lower yields on 10-year Treasury notes translate into lower mortgage interest rates for home buyers as well. On the other hand, it also helps to know that adjustable-rate mortgages (ARMs) are primarily impacted by the fed funds rate − not 10-year Treasuries.

Strategies For Buying Or Refinancing As Rates Rise

Caught watching mortgage rates rise as Treasury yields go up? The good news is that there are strategies and solutions which you can implement to offset potential increases in the amount of your monthly mortgage payments as well. For instance, you might utilize a mortgage rate lock to help safeguard against upticks in interest rates. If you’re able to act quickly enough, a cash-out refinance at a lower rate can also help you offset against future interest rate gains. Alternately, using a home equity line of credit (HELOC) may provide flexibility by allowing you to borrow against equity that you’ve already accumulated in your current home. Rocket Mortgage® does not offer HELOCs.

The Bottom Line: The 10-Year Treasury Note Has An Impact On Today’s Mortgage Rates

Treasury notes, bonds, and bills all have an impact on current mortgage rates for homeowners. Moreover, the higher that Treasury yields go, the higher that mortgage interest rates tend to climb. Considering buying or refinancing in the face of impending rate jumps? Know that you have options that can help you keep budget increases at bay.

Speaking of strategies that you can use to hedge against potential gains in Treasury yields and mortgage rates: You may want to act quickly to secure the best interest rate today. Be sure to check out Rocket Mortgage® home buying articles for more information if you’re ready to pursue your home buying journey.

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Scott Steinberg

Hailed as The Master of Innovation by Fortune magazine, and World’s Leading Business Strategist, award-winning professional speaker Scott Steinberg is among today’s best-known trends experts and futurists. A strategic adviser to four-star generals and a who’s-who of Fortune 500s, he’s the bestselling author of 14 books including Make Change Work for You and FAST >> FORWARD. The CEO of BIZDEV: The Intl. Association for Business Development and Strategic Planning™, his website is