If you’ve been waiting for mortgage rates to drop, you’re not alone. The 10-year Treasury yield plays a huge role in where mortgage rates go, and right now, all eyes are on the new Treasury Secretary Scott Bessent to see what moves they’ll make.
So, can mortgage rates hit the 5s? It’s possible if the Treasury plays it right. Here’s what they can do to push rates lower:
1. Treasury Buybacks – Lowering the Supply of Long-Term Bonds
If the Treasury buys back longer-term bonds from the market, it reduces supply, drives bond prices up, and lowers yields—which means lower mortgage rates for buyers and refinancers.
2. Issuing More Short-Term Debt Instead of Long-Term Bonds
By shifting towards shorter-term debt issuance (like 1-year notes vs. 10-year bonds), demand for the 10-year Treasury could increase.
More demand = lower yields = lower mortgage rates.
3. Controlling the Federal Deficit
Massive government borrowing means more bonds flooding the market, pushing yields higher. If the Treasury can manage debt issuance more strategically, it could help keep rates in check.
4. Working with the Fed to Ease Rate Pressures
The Treasury and Federal Reserve don’t always move in sync, but if they signal a more aggressive rate-cut approach or restart bond-buying programs (like QE), long-term yields could fall.
5. Market Confidence & Signaling
Sometimes, just words can move markets. If the Treasury Secretary signals that inflation is cooling and the economy is stabilizing, bond markets could react by pricing in lower rates, bringing mortgage rates down with them.
What This Means for You
A lower 10-year Treasury yield means mortgage rates could drop into the 5% range—unlocking lower monthly payments, more affordability, and refinancing opportunities for millions of homeowners.
If rates drop, will you be ready?.
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