# Mortgage rates track the 10-year Treasury yield, which was 5.22% on 8 October against a Fed funds rate of 3.88%

> This explainer traces how Treasury yields set mortgage rates, how rates set the monthly payment, and how the payment sets the number of contracts a coordinator sees. At Freddie Mac's 7.40%, principal and interest on a median-priced home run $252 a month above the payment at last year's rate.

**Section:** The Desk  
**Published:** October 11, 2026  
**Byline:** TC Bulletin Staff  
**Canonical URL:** https://tcbulletin.com/desk/mortgage-rates-follow-ten-year-treasury-yield-5-22-percent-october-8  
**Publisher:** TC Bulletin (tcbulletin.com)

## Key points

- On 8 October 2026 the 10-year Treasury yield was 5.22% and the 30-year Treasury yield 5.60%, while the effective federal funds rate was 3.88% on every day the Federal Reserve published from 2 to 8 October. Freddie Mac's 30-year mortgage average for the same week was 7.40%.
- The gap between the mortgage rate and the 10-year yield was about 2.1 to 2.2 points that week. Wolf Street's analysis of Freddie Mac and Treasury data put it at 1.97 points in early September, about 2 points at the end of 2025, and above 3 points in 2022 and 2023.
- From the week through 2 September to the week ending 8 October, the 10-year yield rose from 4.74% to 5.22% and the Freddie Mac rate from 6.71% to 7.40%.
- Cotality chief economist Selma Hepp said on CNBC on 2 October that 'The most important story in the housing today is no longer Fed. It's really the bond market.'
- On a $343,280 loan, a 20% down payment on NAR's $429,100 August median price, principal and interest is $2,125 a month at 6.30% and $2,377 at 7.40%. That is $252 more, or 11.9%.

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A coordinator's volume next quarter depends on how many buyers sign contracts, and the mortgage rate is the largest single input to what a buyer can afford to sign. That rate is set mostly in the bond market. This story explains the chain in the order it works, with the numbers from the week ending 8 October 2026.

## What a Treasury yield is

The US Treasury borrows by selling bonds. An investor who buys a 10-year Treasury lends the government money for ten years and receives interest. The yield is the annual return on the price the investor paid for the bond. Bond prices and yields move in opposite directions: when investors sell Treasuries and prices fall, the yield on new purchases rises.

The 10-year yield is the reference point for long-term borrowing. Most 30-year mortgages end well before 30 years, because the borrower sells or refinances, so lenders and investors price them against a ten-year benchmark rather than a thirty-year one.

## Why a mortgage costs more than a Treasury

Lenders sell most mortgages to investors packaged as mortgage-backed securities. Those investors could buy a Treasury instead, so they require a premium for the risk that borrowers repay early or default. That premium is the spread between the mortgage rate and the 10-year yield.

Wolf Street, a financial commentary site, calculated the spread at 1.97 points for the week through 2 September 2026, when Freddie Mac's rate averaged 6.71% and the 10-year yield 4.74%. It reports the spread widened to more than 3 points in 2022 and 2023, the widest since the early 1980s, and had narrowed to about 2 points by the end of 2025. Wolf Street attributes part of the narrowing to Fannie Mae and Freddie Mac, announced on 8 January 2026, speeding up purchases of their own mortgage-backed securities. That is the site's analysis, not an agency finding.

### The rates in the week ending 8 October 2026

| Measure | Value | Note |
| --- | --- | --- |
| Effective federal funds rate | 3.88% | Federal Reserve H.15. Unchanged on every day published, 2 to 8 October |
| 10-year Treasury yield | 5.22% | Federal Reserve H.15, 8 October. Ranged 5.22% to 5.31% from 2 to 8 October |
| 30-year Treasury yield | 5.60% | Federal Reserve H.15, 8 October |
| 30-year mortgage average | 7.40% | Freddie Mac, week ending 8 October. 7.28% the prior week, 6.30% a year earlier |
| Mortgage rate minus 10-year yield | 2.1 to 2.2 points | TC Bulletin arithmetic. 2.18 against the 8 October yield, 2.13 against the 2 to 8 October average |

## Why the Fed's rate is not the one that sets the mortgage rate

The federal funds rate is the Federal Reserve's target for overnight lending between banks. It was 3.88% on each day the Fed published from 2 to 8 October, while the 10-year yield moved between 5.22% and 5.31% and Freddie Mac's weekly average rose 0.12 points to 7.40%. A mortgage runs for years, so its price follows the market's expectations for inflation and government borrowing over those years, and not only the overnight rate.

Hepp made the point on CNBC's Squawk on the Street, in an interview Yahoo Finance reported on 2 October: 'The most important story in the housing today is no longer Fed. It's really the bond market.'

Others quoted by CBS News on 24 September named specific pressures. Joel Kan, deputy chief economist at the Mortgage Bankers Association, said ballooning federal debt has pushed up mortgage rates. NAR's Yun said the direction depends on the inflation effects of the Iran war, with a peace deal able to lower oil prices and mortgage rates and continued oil disruption able to push them higher. CBS also reported that CME Group's trading data put the probability of a Fed rate hike at the October meeting at 66%. That figure is market pricing as of 24 September, not a decision.

> **The 5% line.** Wolf Street argued on 3 September that the 30-year mortgage rate would exceed 7% only if the 10-year yield rose above 5% and stayed there, rather than touching 5% briefly as it did in October 2023. The Federal Reserve's H.15 series shows the 10-year at or above 5.22% on each day from 2 to 8 October, and Freddie Mac's weekly average was 7.28% for the week ending 1 October.

## How the rate sets the payment

A buyer's budget is a monthly payment more than a price. Holding the home price and down payment constant, the rate changes the payment directly. The table uses NAR's August 2026 median existing-home price of $429,100, a 20% down payment, a 30-year fixed loan, and principal and interest only. Taxes and insurance are excluded. Cotality's Hepp put a typical monthly payment including them at about $2,800 in the same interview.

### Monthly principal and interest on a $343,280 loan

| Measure | Value | Note |
| --- | --- | --- |
| 6.30% | $2,125 | Freddie Mac's rate a year before 8 October 2026 |
| 6.67% | $2,208 | Freddie Mac's August 2026 average, per NAR |
| 7.40% | $2,377 | Freddie Mac, week ending 8 October 2026. $252 and 11.9% above the 6.30% payment |

> **How this was computed.** TC Bulletin applied the standard fixed-rate amortisation formula to a loan of 80% of $429,100 over 360 months. The figures are illustrations of the rate effect, not quotes, and they ignore mortgage insurance, taxes, insurance and buyer income.

## How the payment sets the number of contracts

A higher payment removes buyers at the margin. Some no longer qualify, and some qualify and decide not to buy. The remaining buyers sign fewer contracts, which shows up first in NAR's Pending Home Sales Index and, a month or two later, in the closings a coordinator works. Yun summarised the relationship in NAR's August report: 'Mortgage rates and home sales move in opposite directions.'

Rates also act on sellers. Hepp said in the same interview that many existing homeowners are reluctant to move because the low-rate loans they hold are valuable to keep, which holds turnover very low. Yun said in NAR's August pending report that transaction activity peaked in 2021 when mortgage rates fell to near 3%, and has not approached that level since. Volume falls from the demand side and the supply side at once.

## Five numbers to watch, in the order they move

1. The 10-year Treasury yield, published daily by the Federal Reserve in its H.15 release. It moves first.
2. Freddie Mac's Primary Mortgage Market Survey, published Thursdays. It is the weekly average of what lenders quote.
3. Redfin's weekly pending sales count, which covers rolling four-week periods and is a brokerage's own revisable data.
4. NAR's Pending Home Sales Index, monthly, which NAR says leads closings by a month or two.
5. NAR's Existing-Home Sales, monthly, which counts closings and so describes work already done.

TC Bulletin's earlier story on housing data lead times sets out what each release measures and how far ahead of a closing it sees.

### Primary sources for this story

- [Federal Reserve, H.15 Selected Interest Rates](https://www.federalreserve.gov/releases/h15/): Daily effective federal funds rate and Treasury constant maturity yields, read 11 October 2026
- [Freddie Mac, Primary Mortgage Market Survey](https://www.freddiemac.com/pmms): 7.40% for 8 October 2026, 7.28% prior week, 6.30% a year ago
- [Yahoo Finance, Cotality's Selma Hepp on CNBC](https://finance.yahoo.com/real-estate/articles/mortgage-rates-could-soar-9-133022314.html): Dated 2 October 2026
- [CBS News, mortgage rates back above 7%](https://www.cbsnews.com/news/mortgage-rates-7-percent-rise-forecast/): Dated 24 September 2026. Quotes from the MBA, NAR, Realtor.com and Zillow, and CME Group pricing
- [Wolf Street, the spread between the 10-year yield and the mortgage rate](https://wolfstreet.com/2026/09/03/the-spread-between-10-year-treasury-yield-30-year-mortgage-rate-has-been-stuck-at-2-percentage-points-despite-fannie-freddie-mbs-buybacks-some-thoughts/): Commentary, dated 3 September 2026. Spread history and the buyback argument
- [NAR, Existing-Home Sales report for August 2026](https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-2-0-decrease-in-august)
- [TC Bulletin on housing data lead times](https://tcbulletin.com/desk/housing-data-lead-times-for-coordinators)

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## Sources cited

- Federal Reserve H.15 Selected Interest Rates: https://www.federalreserve.gov/releases/h15/
- Freddie Mac Primary Mortgage Market Survey: https://www.freddiemac.com/pmms
- Yahoo Finance, Cotality's Selma Hepp: https://finance.yahoo.com/real-estate/articles/mortgage-rates-could-soar-9-133022314.html

Topics: market-volume, mortgage-rates

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