A few weeks ago, during one of my buyer consultations in Redlands, a young couple asked me a question that’s been on almost everyone’s mind this year:
“Leonard, are mortgage rates finally going to come down — and stay down?”
It’s a fair question. After years of rate hikes, buyers and sellers alike are watching every slight movement in the market, hoping for a sign that the tide is turning.
The good news? That sign might already be here.
Mortgage rates have started to ease, and according to many housing economists, there’s reason to believe they could continue trending lower into next year. Let’s break down why — and what this means for you if you’re thinking about buying, selling, or refinancing in Redlands, Highland, or Yucaipa.
The Connection Between Mortgage Rates and the 10-Year Treasury Yield
Here’s something most people don’t realize: mortgage rates are closely tied to the 10-year Treasury yield — a benchmark investors watch to gauge long-term interest trends.
For over 50 years, the 30-year fixed mortgage rate has followed the movement of that yield almost step for step.
-
When the yield climbs, mortgage rates rise.
-
When the yield drops, mortgage rates typically follow.
That relationship has been remarkably consistent — and right now, it’s pointing toward lower rates ahead.
Why the “Spread” Matters — and Why It’s Finally Shrinking
There’s a number experts watch called the spread, which is basically the difference between the 10-year Treasury yield and mortgage rates. Historically, that gap sits around 1.76 percentage points.
But in recent years, uncertainty — from inflation to global events — pushed that spread wider than usual. The wider the gap, the more “fear” is priced into the market, and the higher mortgage rates stay.
Here’s the shift: that spread is finally narrowing again.
As confidence returns to the economy, lenders don’t need to build in as much risk. And when that happens, mortgage rates start to naturally move lower.
Or as a recent Redfin article put it:
“A lower mortgage spread equals lower mortgage rates.”
That’s exactly what we’re beginning to see — and it’s giving buyers some breathing room they haven’t had in years.
The 10-Year Treasury Yield Is Expected To Decline
It’s not just the spread improving — the 10-year yield itself is projected to ease throughout 2025.
When you combine:
-
A lower Treasury yield, and
-
A narrowing spread,
you get two powerful forces both working to push mortgage rates downward.
If the trend continues, experts suggest rates could dip into the high 5% range by late 2025 or early 2026 — a level that could bring a fresh wave of buyers back into the market and open the door for many who’ve been waiting on the sidelines.
For perspective: with today’s yield around 4.09%, adding the average spread of 1.76% gives an estimated mortgage rate near 5.85%.
That’s not wishful thinking — it’s grounded in historical patterns that have held for decades.
What This Means for You (Locally)
For homeowners in Redlands, Highland, and Yucaipa, this gradual shift could open several opportunities:
-
Buyers: A drop in rates means better affordability and potentially thousands saved over the life of a loan.
-
Sellers: As affordability improves, buyer demand increases — which can lead to faster offers and stronger prices.
-
Refinancers: Even a 1% drop in rates can make a significant difference in monthly payments or equity growth.
The housing market in our area has remained resilient through every season — and this next chapter may bring some long-awaited balance back between buyers and sellers.
The Bottom Line
Keeping up with all these market shifts can feel overwhelming — and you shouldn’t have to navigate it alone.
As a local real estate professional with The Len Group | Keller Williams Redlands, I stay closely connected to the latest data, lender insights, and economic forecasts so my clients can make informed, confident decisions — whether it’s time to buy, sell, or simply plan ahead.
If you want real-time updates on mortgage trends or guidance on how these shifts could impact your next move, I’d love to walk you through it.
Let’s talk about what your next move could look like.
I’ll give you a clear picture of your home’s value and help you plan a transition that’s financially smart and stress-free.
📲 Let’s connect and build your next step with confidence.
🔗 Schedule Your Home or Market Consultation »
