Macro context
Why mortgage rates follow the 10-year Treasury
Why the 30-year fixed mortgage rate tracks the 10-year Treasury yield rather than the Fed funds rate, what the spread between them reflects, and where the weekly mortgage data comes from.
Where the mortgage rate data comes from
The widely quoted US mortgage rates come from Freddie Mac's Primary Mortgage Market Survey (PMMS), a weekly average of rates offered to borrowers on 30-year and 15-year fixed-rate loans, published on Thursdays. Aerarium shows both series (FRED MORTGAGE30US and MORTGAGE15US).
They are averages of offered rates for well-qualified borrowers, not the rate any one borrower will get, which also depends on credit, down payment, points and loan type.
Why the 10-year, not the Fed funds rate
A 30-year mortgage is rarely held for 30 years: borrowers move or refinance, so the money is typically repaid much sooner. Investors who buy mortgages, mostly packaged as mortgage-backed securities, therefore price them against intermediate-maturity Treasuries, and the 10-year yield is the usual benchmark.
The Fed funds rate is an overnight rate. It influences mortgage rates indirectly, through expectations for future policy that are built into longer Treasury yields, but it does not set them. Mortgage rates can rise while the Fed is cutting, if longer yields rise.
What the spread over Treasuries reflects
The gap between the 30-year mortgage rate and the 10-year yield compensates mortgage investors for prepayment risk — homeowners refinance exactly when rates fall, returning money when it is least valuable — and covers guarantee fees, servicing costs and lender margins.
The spread is not constant. It widens when rate volatility rises or demand for mortgage-backed securities falls, and it widened markedly during 2022 and 2023. The macro page plots the spread alongside both rates so a change in mortgage rates can be split into "Treasuries moved" and "the spread moved".
Common questions
Why do mortgage rates follow the 10-year Treasury yield?
Most mortgages are repaid well before 30 years through moves and refinancing, so investors price them against intermediate Treasuries, and the 10-year yield is the standard benchmark.
Does a Fed rate cut lower mortgage rates?
Not directly. The Fed sets an overnight rate; mortgage rates follow longer-term yields, which depend on expectations for the whole path of policy, inflation and risk.
What is the mortgage spread?
The difference between the average 30-year fixed mortgage rate and the 10-year Treasury yield. It reflects prepayment risk, guarantee and servicing fees, and lender margins.
How often is mortgage rate data updated?
Freddie Mac's PMMS is published weekly, on Thursdays.