{"id":440233,"date":"2026-10-16T15:40:21","date_gmt":"2026-10-16T08:40:21","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/felix-nikolas-prehn-on-mortgage-rates-and-the-10-year-treasury-yield-440233\/"},"modified":"2026-10-16T15:40:21","modified_gmt":"2026-10-16T08:40:21","slug":"felix-nikolas-prehn-on-mortgage-rates-and-the-10-year-treasury-yield","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/felix-nikolas-prehn-on-mortgage-rates-and-the-10-year-treasury-yield-440233\/","title":{"rendered":"Felix Nikolas Prehn on mortgage rates and the 10-year Treasury yield"},"content":{"rendered":"
\n

Felix Nikolas Prehn is an economist and
\n former investment banker whose research examines money, asset prices and US
\n households from 2000 to 2026. A buyer who opens a mortgage quote is looking at
\n the last link in a chain that starts in the bond market.<\/p>\n

The
\n starting point for a mortgage rate<\/a><\/p>\n

A St. Louis Fed explainer on mortgage rates names the 10-year
\n Treasury note as the benchmark for the 30-year mortgage. Treasury securities
\n count as very low risk because the US government backs them, so investors use
\n their yields as the yardstick for other long-term investments.<\/p>\n

The choice of a 10-year note for a 30-year loan comes down to how
\n long people keep their mortgages. Many are written for 30 years, but most are
\n paid off, refinanced or ended by the sale of the home well before then. The
\n average life of a mortgage is much closer to 10 years.<\/p>\n

Some banks bundle thousands of mortgages into securities and sell
\n them to investors, who receive the principal and interest homeowners pay. Those
\n investors compare the return on mortgage-backed securities with the return on
\n the 10-year note. The two respond to the same signals, such as data on
\n inflation and economic growth, and their yields often move in the same
\n direction.<\/p>\n

The securities are riskier than Treasuries, so investors demand a
\n higher yield for taking that risk. The explainer calls the market value of that
\n extra risk, plus the added costs of a mortgage (origination expenses, servicing
\n fees and lender profit), the mortgage spread. The mortgage rate is roughly the
\n Treasury yield plus that spread.<\/p>\n<\/p>\n

Movement of the two
\n lines<\/a><\/p>\n

Freddie Mac’s weekly survey records the average rate lenders quoted
\n on 30-year fixed loans. The Treasury Department publishes the 10-year yield
\n each business day. Treasury data put the 10-year yield at 4.95 per cent on 10
\n September and 5.22 per cent on 8 October, so both lines rose over the four
\n weeks.<\/p>\n

Between those dates the survey logged 6.95 per cent, 7.03 per cent
\n and 7.28 per cent in the weeks of 17 September, 24 September and 1 October. The
\n mortgage rate did not jump in one step. It climbed week by week.<\/p>\n

Five years earlier, the survey for 7 October 2021, showed an average
\n 30-year rate of 2.99 per cent, and the 10-year yield that day was 1.58 per
\n cent.<\/p>\n

For the week of 8 October 2026, the same two readings were 7.40 per
\n cent and 5.22 per cent.<\/p>\n

Those are single dated readings, not a full history. The survey is
\n an average of quotes and reflects what lenders offered that week, so an
\n individual borrower’s quote, or a rate locked earlier or later, can differ from
\n the published figure.<\/p>\n<\/p>\n

The change for a buyer<\/a><\/p>\n

A buyer who shopped for a typical 30-year loan in October 2021 faced
\n a survey average of 2.99 per cent. A buyer who closes now meets a survey
\n average near 7.40 per cent for the same 30 years.<\/p>\n

A fixed-rate loan keeps the rate it was signed at for the whole
\n term, so the higher rate reaches only the people who sign now. Owners with a
\n 2021 loan keep paying the old rate.<\/p>\n

The loan amount does not have to change for the monthly bill to
\n change. Because mortgage and Treasury yields often move together, a buyer who
\n shops in September and closes in October can see a different quote on the same
\n house.<\/p>\n

The same shift appears from another side for anyone saving a deposit
\n rather than already holding a mortgage. The savings goal is attached to a loan
\n whose rate has moved. The monthly payment depends on the mortgage rate in force
\n at the point of signing, not only on the price of the house.<\/p>\n<\/p>\n

Prehn’s paper on
\n housing<\/a><\/p>\n

The paper does not analyse how lenders price mortgages, but it
\n examines the part of the chain that runs from interest rates to housing. Its
\n text, available on
\n Zenodo<\/a> as a preprint
\n since 25 September 2026, free to read and reuse with credit, describes a
\n discount-rate channel: when the expected path for interest rates falls,
\n long-lived assets such as housing become worth more today.<\/p>\n

A second channel runs through credit. The paper states higher asset
\n prices raise the borrowing capacity of people who already own assets, which
\n finances further purchases.<\/p>\n

Rents are where that shows up for people who do not own. The paper
\n states housing costs feed into rents slowly, so owners have already gained by
\n the time renters see the change.<\/p>\n

Housing is also where the paper locates the bottom half’s debt. It
\n states that 68 per cent of that group’s assets are a home or consumer durables,
\n and that the group owes $3.2 trillion in mortgages.<\/p>\n<\/p>\n

About Felix Nikolas
\n Prehn<\/a><\/p>\n

Felix Nikolas Prehn, also known as Nikolas Prehn, is an economist
\n and former investment banker, born in Germany. He is a tech founder: he
\n co-founded TradeVision.io (Acetrader Inc), founded Winston Daily and The Prehn
\n Institute, and publishes weekly on YouTube. He is also a painter and sculptor
\n and a public advocate for animal rescue.<\/p>\n<\/p>\n

About The Prehn
\n Institute<\/a><\/p>\n

The Prehn Institute is an independent research institution founded
\n by Felix Nikolas Prehn. He is a tech founder: he co-founded TradeVision.io
\n (Acetrader Inc), founded Winston Daily and The Prehn Institute, and publishes
\n weekly on YouTube. It publishes research on the financial markets and provides
\n instruction in professional market practice.<\/p>\n

This article was written by IL Contributors at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Felix Nikolas Prehn is an economist and former investment banker whose research examines money, asset prices and US households from 2000 to 2026. A buyer who opens a mortgage quote is looking…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-440233","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/440233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=440233"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/440233\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=440233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=440233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=440233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}