Why mortgage rates follow the 10-year Treasury, not the Fed
People watch the Fed and wonder why their mortgage quote didn't move. The number to watch is the 10-year Treasury yield. Here is why, with today's numbers.
The three numbers
Fed funds, the rate the Fed actually sets: 3.88% (DFF, 2026-10-21). The 10-year Treasury: 5.13% (DGS10, 2026-10-21). The 30-year mortgage: 7.32% (MORTGAGE30US, 2026-10-22).
Notice the mortgage sits 2.19 points above the 10-year and 3.44 points above the Fed rate. Over the last 12 months the 30-year moved +1.10 while the 10-year moved +1.14: nearly in step. That is the relationship.
Why the 10-year
A 30-year mortgage is rarely held 30 years. People sell or refinance, so the average loan lasts closer to a decade. Investors who buy mortgage bonds compare them to the safest ten-year investment there is, the 10-year Treasury, and demand a premium on top for the extra risk and the chance you refinance when rates drop. That premium is the gap above. Historically it has run around 1.5 to 2 points; when it is wider, lenders are nervous or the Fed is shrinking its bond holdings.
Why not the Fed rate
The Fed sets an overnight rate. It feeds directly into things that reprice every month: credit cards, home equity lines, car loans with a lag. Long rates like the 10-year are set by the bond market's guess about inflation and growth over a decade. The Fed influences that guess, but it does not control it. That is why the Fed can hike and mortgage rates can fall on the same day, if the market decides the hike makes future inflation less likely.
What it means for you
If you are waiting for a rate, watch the 10-year each morning, not the Fed calendar. A 0.25 move in the 10-year is usually a 0.2 to 0.3 move in mortgage quotes within a week. Run your number: the mortgage calculator loads today's rate, and the refinance calculator tells you what a given drop is worth to you.
Both lines, month by month, are on the rate history charts.
Questions people ask
Does a Fed rate cut lower my mortgage rate?
Not directly. Mortgage rates track the 10-year Treasury, which moves on expectations. If the market already expected the cut, nothing happens on the day.
What is the normal gap between the 10-year and the 30-year mortgage?
Roughly 1.5 to 2 percentage points over the long run. Today it is 2.19 points.
Which Fed series should I watch?
DGS10 on FRED for the 10-year yield, MORTGAGE30US for the weekly mortgage average. Both are charted on the Turner Finance desk.
Every figure on this page is the latest reading of the named Federal Reserve (FRED) series on the date shown, pulled 2026-10-23. The page is regenerated when the desk refreshes.