Mortgage rates fell less than Treasury yields in October, widening the gap to 2.24 points

The gap between the average 30-year mortgage rate and the 10-year Treasury yield was about 2.24 percentage points in the week ended October 29, up from 1.97 in the week ended August 27 (computed from Freddie Mac and US Treasury data). The rate fell 0.16 percentage point from its peak while the yield fell 0.28.

Two series that moved together all summer, then stopped

Freddie Mac's Primary Mortgage Market Survey (PMMS) put the 30-year fixed rate at 6.66% in the week of August 27 and 7.40% in the week of October 8, according to its historical series. That is a rise of 0.74 percentage point (computed). The survey was at 7.40% again on October 15, then 7.32% on October 22 and 7.24% on October 29.

The comparison needs a yield that covers the same days. Freddie Mac says its results "are an average of loan rates offered the prior Thursday through Wednesday." For each survey date, the 10-year Treasury yield below is the average of the daily closes in that Thursday-to-Wednesday window, using the Treasury Department's daily par yield curve rates.

Survey date	30-year mortgage rate (Freddie Mac)	10-year yield, average of the window (computed)	Gap (computed)
August 27	6.66%	4.69%	1.97 points
October 8	7.40%	5.28%	2.12 points
October 29	7.24%	5.00%	2.24 points

Sources: Freddie Mac PMMS history; US Treasury daily par yield curve rates. Gaps are computed from unrounded yield averages.

Over the same two months the average 10-year yield rose 0.59 percentage point, from 4.69% to 5.28% (computed), so the mortgage rate rose more than the yield by 0.15 percentage point. In the weeks between July 16 and September 10 the same gap stayed between 1.96 and 2.01 percentage points (computed from the same two sources).

The October decline was smaller for mortgages than for Treasuries

From the week of October 8 to the week of October 29 the 30-year rate fell 0.16 percentage point, from 7.40% to 7.24%. The average 10-year yield fell 0.28 percentage point, from 5.28% to 5.00% (computed), so the gap widened by 0.12 percentage point.

The Treasury series shows the 10-year yield closing at 5.31% on October 5, the highest close of 2026, and at 4.91% on November 2, according to Treasury data. That is 0.40 percentage point lower (computed).

The 15-year fixed-rate mortgage followed the same path with a smaller rise: 5.98% on August 27, 6.73% on October 8 and 6.60% on October 29, according to Freddie Mac's series. Its rate fell 0.13 percentage point from the peak (computed).

What the survey cannot show

Neither Freddie Mac nor the Treasury Department says why the gap widened, and the data here does not show why. Freddie Mac's own commentary for October 29 said only that the 30-year rate declined again and reached "its lowest level this month."

The survey has limits that matter for a gap measured to hundredths of a point. Freddie Mac says its figures come from "thousands of loan applications submitted to Freddie Mac" through its Loan Product Advisor system, covering conventional, conforming, single-family purchase loans. It also says that, because fees and points are not always provided by lenders, "we are not able to report on the average fees and points." A change in points would change the cost of a loan without moving the quoted rate.

A weekly average of loan rates and an average of daily yields are also different measures, so the gap is a descriptive figure and not a measure of any lender's margin.

What the extra 0.27 point means for a payment

The extra gap can be translated into a monthly payment with standard amortization arithmetic. On a $400,000 30-year fixed loan, a payment at 7.24% is $2,725.99 a month (principal and interest only, computed). At 6.97%, the rate that the week's 5.00% average yield would imply with August's gap of 1.97 points, the payment is $2,653.16, or $72.83 less (computed). The calculation is an illustration, not a forecast: it assumes the yield and the gap move independently, and Freddie Mac does not publish a rate for that scenario.

FinanceInTime has covered the payment effect of the level of rates in a report on a $400,000 mortgage and the weekly decline in mortgage rates for a second week. Those reports rest on the level of the rate. This analysis looks at the part of the rate that the Treasury yield does not account for.

We would watch the gap, not only the yield

We think the October numbers argue for reading mortgage rates against Treasuries, not against headlines about yields. A fall in the 10-year yield of 0.28 percentage point reached borrowers as a fall of 0.16, and a household comparing monthly payments feels the mortgage rate, not the yield.

There is a threat and an opportunity in the same figure. The threat is that a gap near 2.2 percentage points, if it stays there, would keep rates above 7% even with lower yields. The opportunity is that a gap that returned to its summer range of about 2.0 would lower the 30-year rate by roughly 0.2 percentage point at an unchanged yield, which we would see as a modest help to affordability.

Our expectation, over the next six to twelve months and only if yields stay near 5%, is that the gap matters as much as the yield for housing demand. We would change this view if the next several surveys show the gap back near 2.0 points or if Freddie Mac's data show that points and fees explain part of the difference. We do not call a top or bottom for rates.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.