US borrowing costs are climbing as 10-year Treasury yields top 5% and the federal deficit nears $2 trillion, putting pressure on housing, government finances and economic growth.
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01Summary
- 01The 10-year Treasury yield closed at 5.19%, up 123 basis points since the end of February.
- 02The average 30-year fixed mortgage rate is around 7.5%, and pending home sales fell 4% in September, Redfin said.
- 03The federal deficit is expected to come in near $2 trillion for the 2026 fiscal year, or about 6.0%-6.2% of GDP.
- 04The Congressional Budget Office says a half-point rise in rates would add $1.9 trillion to deficits over 10 years, while a 1.5-point rise would add $6 trillion.
- 05The overall US debt hit $40 trillion this year, while Treasury Secretary Scott Bessent has said the deficit should fall below 4% of GDP by the end of Donald Trump's term.
02Why it matters
Higher Treasury yields feed directly into mortgage and government borrowing costs, which can slow the housing market and make deficits harder to control. If rates stay elevated, the federal debt burden becomes more expensive to finance for years.
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