Why Low 10-Year Treasury Bond Rates Equal a Cheaper Mortgage

Category: Market Updates
Posted: 6/11/2019 | Read Time: 2min
Last Updated: 9/11/2021

In a time where 85 percent of Americans believe homeownership is still a wise investment and another 38 percent are likely to purchase a home in 2021*, current low 10-year bond rates certainly make the idea of buying a home even more tempting.

While not a direct component of any home loan, mortgage product or mortgage rate, 10-year bonds are one of the many broad economic indicators that offer advantages in owning a home.

Let’s take a look at what a 10-year Treasury bond is and how taking advantage of 10-year Treasury and mortgage rates can benefit you in your home purchase journey.

What is a 10-Year Treasury Bond?

A 10-year Treasury bond is a financial instrument that pays interest out every six months, with the principal paid at bond maturity.
These are bonds sold by the U.S. government and backed by the Treasury. They are also used as an indicator of how confident investors are in the market.

Why is the Rate on this Investment so Important?

During times of high confidence, investors usually look elsewhere for higher risk, higher return forms of investment, which causes the bond price to go down and its yield to go up. This is why even slight movements in the yield on this bond could show promise for returns on multiple kinds of investments.

The Effect of the 10-Year Treasury Bond on Mortgages

So, what do 10-year Treasury bond and mortgage rates have in common? Because mortgages are backed by various bonds and securities, the low cost of a 10-year bond is translated into savings on a mortgage.

Low yields on Treasury bonds equal low mortgage interest rates, and lower rates mean homebuyers could save money when purchasing a new home, a bigger home, or even a second home. These home purchases help stimulate the real estate market.

How are Current Interest Rates Impacted?

At the end of December 2020, the real estate market saw low interest rates for various home purchasing options.

As of June 2021, yield rates have increased slightly to 1.48 percent from late December’s .93 percent yield rate. Despite this small rate increase, today’s mortgage interest rates are still comparable to those seen in late December.

While it is not important to understand all of the financial terminology associated with this indicator and the specifics of investing, anyone who is preparing to take out a mortgage could benefit from the savings associated with lower yields. It is recommended to see a tax advisor or licensed investment representative for further guidance and explanation.

Have more questions about the mortgage process? See your top mortgage questions answered by Wyndham Capital Mortgage’s loan officers!

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*Wyndham Capital Mortgage commissioned Atomik Research to run an online survey of 2,342 adults in the United States for their Mortgage 101 survey. The margin of error fell within +/- 2 percentage points with a confidence interval of 95 percent. The fieldwork took place between March 23rd and March 29th, 2021. Atomik Research is an independent creative market research agency.


Maggie joined the Wyndham Capital Mortgage team in November 2020 as a Content Strategist. She has more than six years of content creation experience, which includes launching WBTV’s digital brand Queen City Weekend (now QC Life) and garnering more than 1.1 million page views across her articles. With a love of storytelling, she hopes to bring that passion to WCM and the many families it serves. She resides in Charlotte, North Carolina, and can often be found at a coffee shop, latte in hand.

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