30-Year Treasury Yield Hits a 19-Year High. What That Means for Your Mortgage.

In short: The 30-year Treasury yield briefly hit a 19-year high before retreating after the announcement of larger bond buybacks. Mortgage borrowers should remember that while Treasury yields were mechanically pushed down, the underlying forces behind their rise – the government deficit, oil shock, and AI debt – haven’t faded and will likely put a floor under how far mortgage rates can fall.

Mortgage rates edged down as Treasury announced expanded bond buybacks

If you opened a (virtual) newspaper, you may have seen headlines that the 30-year Treasury yield hit a 19-year high, before sharply dropping after the Treasury Department announced it will increase its repurchase of government debt. While the buybacks may mechanically push Treasury yields down, the underlying reasons for elevated rates – government deficit, geopolitical impacts on prices, and companies issuing debt to fund AI spending– don’t appear to be fading anytime soon. For mortgage borrowers, that means rates may be elevated for longer. Zillow expects mortgage rates to drift down, but only marginally.

What’s the impact on housing? 

For the first half of 2026, home shoppers had better buying power than a year ago, but that is likely not true for the rest of the year. Because we forecast mortgage rates to only fall to 6.5% by year-end, shoppers who didn’t find their home last Autumn or Winter will likely face a higher monthly mortgage payment for a similar home today. Therein lies the reminder that trying to time the market is tricky, since borrowing costs can move in either direction. 

Given the affordability headwinds, we expect a weaker second half of the year for sales growth, with flat to declining transaction volumes in some regions.