What needs to happen for mortgage rates to come down?

Stan McCune, host of the Selling Greenville podcast, recorded this episode on Sunday, February 2, with one big question on the table: what needs to happen for mortgage rates to come down? He walks through how tariffs, inflation data, the Federal Reserve’s stance, and especially the 10-year Treasury yield all connect to the 30-year fixed rate—and what that could mean for buyers and sellers in the months ahead.

What needs to happen for mortgage rates to come down

In plain terms, two things would most likely nudge mortgage rates to come down:

1. convincing evidence that inflation is cooling or the economy is slowing, and/or

2. a Federal Reserve pivot toward rate cuts (often triggered by recession risk). Because mortgage rates track the 10-year Treasury closely, anything that pushes investors to buy Treasurys (bringing the yield down) tends to pull mortgage rates down with it.

The 10-Year Treasury: The bellwether to watch

• The 30-year fixed and the 10-year Treasury “follow each other very closely.”

• Recently, the 10-year has been trading in a range, struggling to break above ~4.8% (a ceiling) and, since mid-December, struggling to drop below ~4.5% (a floor).

• Portfolio managers often step in to buy bonds as yields approach the high end, helping cap the move; on the low end, markets seem to want clearer proof that inflation and/or growth are cooling before pushing yields decisively lower.

The spread that sets your street-level rate

• Today’s mortgage rate isn’t just the Treasury yield—it’s the yield plus a spread.

• Lately, that spread has hovered around ~250 basis points (2.5%).

• Example from the episode: with the 10-year near ~4.54%, that spread puts average 30-year fixed rates near the low 7s (Mortgage News Daily showed ~7.05% at the time of recording).

• If the spread tightens (it has some), rates can dip even if the 10-year doesn’t move much.

Three Paths From Here (and what could push each one)

Stan outlines three plausible outcomes—no crystal ball, just scenarios tied to the data.

1) Rates drift higher

• Proposed tariffs (e.g., on Canada/Mexico/Taiwan) could lift prices in the short term.

• Hotter inflation prints would likely make Fed messaging more hawkish.

• Bond markets would sell off, the 10-year would rise, and mortgage rates would follow.

2) Rates move lower

• If tariffs don’t meaningfully feed inflation—or if growth cools—markets could price in slower inflation.

• A recession would likely push the Fed toward cuts and other easing tools.

• Lower 10-year yields would pull mortgage rates down.

3) Rates bounce inside a range

• Without a clear catalyst, we may continue to see choppy, range-bound action.

• Since mid-October, mortgage rates have largely hovered roughly ~6.6% to ~7.3% (per indices referenced in the episode).

• With the 10-year stuck between ~4.5% and ~4.8%, a similar band in mortgage rates is plausible.

Why tariffs keep coming up in a real estate show

Tariffs are effectively a tax on imported goods that can raise end-buyer prices. If they push inflation higher—or even just keep it sticky—the Fed may hold or hike instead of cutting. But modeling is hard (the Fed itself has downplayed reliance on its old models), and prior 2018 tariffs didn’t dramatically move inflation or rates. Today’s proposals are larger, so effects could differ—uncertainty is the point.

Practical takeaways for today’s buyers and sellers

• Watch the 10-year Treasury. It’s the cleanest real-time compass for where rates might go next.

• Shop the spread. Lenders price differently; strong credit profiles can beat the aggregated averages discussed on the show.

• Use tools creatively. Rate buydowns, programs without PMI, and even mortgage assumptions (Stan mentions a client pursuing a 2.99% assumption) can make payments more attractive—even if headline averages are in the 7s.

• Talk to a lender early. If rates wobble inside a band, structure and timing matter.

Not investment advice—this episode reflects Stan’s view based on current data and market behavior at the time of recording.

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Bottom Line

For now, mortgage rates appear stuck in a range between the high-6s and low-7s, tethered to the 10-year Treasury yield. The wild cards—tariffs, inflation data, and the Fed’s response—could nudge rates either direction, but without a sharp shift, stability inside that band seems most likely. Buyers and sellers can’t control these macro forces, but they can control how they prepare. By watching the bond market, shopping lenders, and using creative financing tools, it’s possible to make smart moves even before mortgage rates come down in a bigger way.

Ien Araneta

Journal & Podcast Editor | Selling Greenville