How does the 10-year Treasury affect mortgage rates?

Here's the big number you should be tracking. (iStock)

For mortgage borrowers, looking at the 10-year Treasury rates is more important than most realize. Since mortgage rates often closely align with the 10-year Treasury bond yields, keeping an eye on this rate can help borrowers assess when to take out a mortgage or if 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 bonds, what you need to know, and why it is important to pay attention to these rates. For homeowners thinking of refinancing, now is a great time to visit Credible​ to view loan options across multiple lenders with fewer forms to fill out.

How does the 10-year bond affect mortgage rates?

Any company or entity can sell bonds, but Treasury bonds specifically are secured by the government, making them the "safest" investment since they are guaranteed repayment. When investors buy bonds, they’re basically loaning the entity – in this case, the government – money, and in return investors get a certain percentage back as "interest" until the bond matures.

Treasury bonds come in different maturity rates, ranging from 10 to 30 years. The money is locked up for that amount of time, but once a bond matures, the owner gets repaid the face value. In the interim, investors earn the set interest rate on the investment.

With loan rates under 3%, now is a great time to refinance your mortgage. With Credible, you can find the best refinance rates and prequalify for a refinance within minutes.


Here’s an important term to know when it comes to bonds: yield.

The U.S. bond yield is how much the government will pay on the bonds they sell. When yields are low, it means demand is high and the government doesn’t have any trouble selling these bonds to investors. When yields are high, it means demand is low and the government is looking to entice investors with higher interest rates.

The 10-year Treasury bond yield rate is important beyond just the rate of return an investor can expect; it is also often used as a sign of investor sentiment: whether investors feel confident enough to invest in the current economy. When demand is high, it often means the stock market and economy are in flux and investors want a "low risk" investment vehicle. When demand is low, it means the outlook and return on other investments, such as stocks and mortgages, are better (and, typically, because the economic outlook is a bit rosier, too).

Over the last 20 years, when mortgage rates went down, yield rates went down too. It’s been the same for this unprecedented year as well. Following the COVID-19 outbreak, Treasury bonds rates sank to an all-time low thanks to high demand; many investors wanted the safety of bonds during a global health crisis.

If you're ready to refinance, use Credible to browse mortgage companies and compare loan rates without affecting your credit score.

Other factors that affect mortgage rates

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

For those concerned about missing out on record-low interest rates, visit Credible, where borrowers can explore mortgage refinance options and compare rates and lenders with ease.